As filed with the Securities and Exchange Commission on June 27, 2003

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

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Form 20-F

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ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2002
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
83/8% Global Guaranteed Notes due 2005
91/4% Global Guaranteed Bonds due 2018
93/8% Notes due December 2, 2008, Puttable at Par on December 2, 2001
9.50% Puttable or Mandatorily Exchangeable Securities (POMESSM) due 2027
8.50% Notes due 2008
9.125% Notes due 2010
6.50% Guaranteed Notes due February 1, 2005
8.00% Notes due 2011
7.875% Notes due 2009
8.625% Bonds due 2022
7.375% Notes due 2014

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.

ý
Yes        o No

Indicate by check mark which financial statement item the registrant has elected to follow:

o
Item 17        ý Item 18

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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                                                    |  | 12 
|Item 5.  |  | Operating and Financial Review and Prospects                                  |  | 78 
|Item 6.  |  | Directors, Senior Management and Employees                                    |  | 109
|Item 7.  |  | Major Shareholders and Related Party Transactions                             |  | 127
|Item 8.  |  | Financial Information                                                         |  | 128
|Item 9.  |  | The Offer and Listing                                                         |  | 131
|Item 10. |  | Additional Information                                                        |  | 131
|Item 11. |  | Quantitative and Qualitative Disclosures About Market Risk                    |  | 139
|Item 12. |  | Description of Securities Other than Equity Securities*                       |  | 145
|Item 13. |  | Defaults, Dividend Arrearages and Delinquencies*                              |  | 145
|Item 14. |  | Material Modifications to the Rights of Security Holders and Use of Proceeds* |  | 145
|Item 15. |  | Controls and Procedures                                                       |  | 145
|Item 16. |  | [Reserved]*                                                                   |  | 145
|Item 17. |  | Financial Statements*                                                         |  | 146
|Item 18. |  | Financial Statements                                                          |  | 146
|Item 19. |  | Exhibits                                                                      |  | 146

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(*)
Omitted because the item is inapplicable or the answer is negative.

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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 our financial statements included in Item 18 (the "Financial Statements"), including the Pemex Project
Funding Master Trust, are incorporated into the consolidated financial statements; these subsidiary companies are also identified with the corresponding ownership
percentages 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."

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 the 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. 10.3125 =
$1.00, which is the exchange rate that the Ministry of Finance and Public Credit provided us on December 31, 2002. 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.

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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

The selected financial data set forth below should be read in conjunction with, and are qualified in their entirety by reference to, the Financial Statements
included in Item 18. The selected financial data set forth below as of the five years ended December 31, 2002 have been derived from the consolidated financial statements of PEMEX for the years
ended December 31, 1998 and 1999 (which are not included herein) and
the consolidated financial statements of PEMEX for the years ended December 31, 2000, 2001 and 2002. The consolidated financial statements of PEMEX for the year ended December 31, 2000
were audited by Mancera, S.C. (a Member Practice of Ernst & Young Global), and the consolidated financial statements of PEMEX for the years ended December 31, 2001 and 2002 were audited
by PricewaterhouseCoopers, S.C. See "Item 5Operating and Financial Review and ProspectsChange in Independent Auditors."

The
Financial Statements are prepared in accordance with Mexican Generally Accepted Accounting Principles (which we refer to as "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 2 b) and 15 to the Financial Statements for a discussion of
the inflation accounting rules applicable to us. Mexican GAAP differs in certain significant respects from United States Generally Accepted Accounting Principles (which we refer to as "U.S. GAAP").
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 exploration and drilling
costs, pension premiums and post-retirement benefit obligations, financial instruments, inflation, foreign exchange losses, capitalized interest, depreciation, impairment of fixed assets
and profit in inventory, which are described in Note 19 to the Financial Statements and "Item 5Operating and Financial Review and ProspectsU.S. GAAP Reconciliation."

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Selected Financial Data of PEMEX

|                                   |                                          | 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 in fixed assets at cost(6) | 
|                                   | Ratio of earnings to fixed charges:      |                                        | 
|                                   |                                          | Mexican GAAP(7)                        | 
|                                   |                                          | U.S. GAAP(7)                           | 

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PEMEX
does not currently prepare comprehensive price-level adjusted financial statements in accordance with Bulletin B-10, "Recognition of the Effects of Inflation on
Financial Information," under Mexican GAAP. For the year ended December 31, 1998, Mexico was deemed to be a hyperinflationary economy. Pursuant to Rule 3-

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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 this year reflecting the impact of U.S. GAAP adjustments and reclassifications. For the years ended December 31, 1999, 2000, 2001 and 2002, Mexico was not
considered a hyperinflationary economy. However, we have continued to provide supplemental unaudited price-level adjusted financial information for these subsequent years in lieu of a comprehensive
price-level adjustment that would result from our application 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 Financial Statements included herein.

Selected Financial Data of PEMEX
(continued)

|                                           |  | Years Ended December 31, |        
|------------------------------------------ |  | ------------------------ | -------
|
|
|Unaudited Price-level Adjusted Information |  |                          |        
|Income Statement Data                      |  |                          |        
|Amounts in accordance with U.S. GAAP:      |  |                          |        
|Net sales(1)                               |  | Ps.                      | 279,863
|Total revenues(1)                          |  |                          | 291,360
|Net income (loss)                          |  |                          | (20,974
|Balance Sheet Data (end of period)         |  |                          |        
|Amounts in accordance with U.S. GAAP:      |  |                          |        
|Cash and cash equivalents                  |  |                          | 19,760 
|Total assets                               |  |                          | 546,822
|Long-term debt                             |  |                          | 118,329
|Total long-term liabilities                |  |                          | 282,518
|Total equity                               |  |                          | 190,426

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In January 2003, the Ministry of Finance and Public Credit informed us that, for the fiscal year ended December 31, 2003, we will
recognize the effects of inflation in accordance with NIF-06 BIS "A" section C, which will require us to adopt Bulletin B-10. Among other things, Bulletin
B-10 requires the restatement of all comparative financial statements to constant Mexican pesos of the date of the most recent balance sheet presented. We are currently evaluating the
impact that the adoption of Bulletin B-10 will have on our consolidated financial statements.

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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, |  |              
|1998                    |  | 10.630       
|1999                    |  | 10.600       
|2000                    |  | 10.087       
|2001                    |  | 9.972        
|2002                    |  | 10.425       
|2003:                   |  |              
|January                 |  | 10.978       
|February                |  | 11.064       
|March                   |  | 11.235       
|April                   |  | 10.770       
|May                     |  | 10.424       
|June(2)                 |  | 10.739       

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The noon buying rate for cable transfers in New York reported by the Federal Reserve Bank of New York on June 23, 2003 was Ps.
10.4745 = U.S. $1.00.

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 are subject to global supply and demand and fluctuate due to many factors beyond our control. These factors include competition
within the oil industry and with other industries in supplying clients with competing commodities, international economic trends, exchange rate fluctuations, expectations of inflation, domestic and
foreign government regulations, political events in major oil producing and consuming nations and actions taken by Organization of the Petroleum Exporting Countries (OPEC) members and other oil
exporting countries.

When
international crude oil and natural gas prices are low, we earn less export sales revenue, and, therefore, earn less 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.

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

We are subject to several risks that are common among oil and gas companies. These risks include production risks (fluctuations in production due to operational
hazards, natural disasters or weather, accidents, etc.), equipment risks (relating to the adequacy and condition of our facilities and equipment) and transportation risks (relating to the condition
and vulnerability of pipelines and other modes of transportation).

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More
specifically, our business is subject to the risks of explosions in pipelines, refineries, plants, drilling wells and other facilities, hurricanes in the Gulf of Mexico and other
natural or geological disasters and accidents, fires and mechanical failures. The occurrence of any of these events could result in personal injuries, loss of life, environmental damage and the
necessary clean-up expenses, and damage to property.

Although
we have purchased insurance policies covering some of these risks, these policies may not cover all liabilities, and insurance may not be available for all 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 apply to 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
increases our costs because it requires us to make significant capital expenditures, limits our ability to extract hydrocarbons, resulting in lower revenues, and forces us to raise the price of our
products relative to our competitors. For an estimate of our accrued environmental liabilities, 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. See "Item 3Key
InformationSelected Financial Data" and Note 19 to the Financial Statements. In addition, we generally 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, it could limit PEMEX's ability to satisfy its external debt obligations, and it could privatize PEMEX

Petróleos Mexicanos is a decentralized public entity of the Mexican Government, and therefore the Mexican Government controls us, as well as our
annual budget, which is approved by the Mexican Congress. The Mexican Government has the power to intervene directly or indirectly in our commercial affairs. Such an intervention could adversely
affect our ability to make payments under any securities issued or guaranteed by us.

The
Mexican Government's agreements with international creditors may affect our external debt obligations. In certain past debt restructurings of the Mexican Government,
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.

The
Mexican Government would have the power, if federal law and theConstitución Política de los Estados Unidos
Mexicanos(the Political Constitution of the United Mexican States) were amended, to privatize or transfer all or a portion of Petróleos Mexicanos and the
subsidiary entities or its assets. A privatization could adversely affect production, cause a disruption in our workforce and our operations, and cause us to default on certain obligations. See also
"Considerations Related to Mexico" below.

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

The Mexican Government taxes Petróleos Mexicanos and the subsidiary entities heavily. Approximately 64% of our sales revenues are used to pay
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. For further information, 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." In addition, Petróleos Mexicanos is obligated to pay minimum guaranteed dividends to the Mexican Government. 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 13 to the Financial Statements.

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

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. 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. A reduction in
our oil production or exports could reduce our revenues. For more information, see "Item 5Operating and Financial Review and ProspectsExport Agreements."

PEMEX does not own the hydrocarbon reserves in Mexico, and information on reserves is based on estimates

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 some or all of these rights to another company. Such an event would adversely affect our ability to generate income.

The
information on oil, gas and other reserves set forth in this Form 20-F is based on estimates. Reserves valuation is a subjection 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 and reliability of available data, engineering and
geological interpretation and subjective judgment. Additionally, estimates may be revised based on subsequent results of drilling, testing and production. Therefore, proved reserve estimates may
differ materially from the ultimately recoverable quantities of crude oil and natural gas. Pemex-Exploration and Production revises its estimates of Mexico's hydrocarbon reserves annually, which may
result in material revisions to our estimates of Mexico's hydrocarbon reserves.

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 productivity of our infrastructure. 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. For
more information, see "Item 4Information on the CompanyCapital Expenditures and Investments."

PEMEX may claim some immunities under the Foreign Sovereign Immunities Act and Mexican law, and your ability to sue or recover may be limited

Petróleos Mexicanos and the subsidiary entities are decentralized public entities of the Mexican Government. Accordingly, you may not be able to
obtain a judgment in a U.S. court against us unless the U.S. court determines that we are not entitled to sovereign immunity with respect to that action. In addition, Mexican law does

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not
allow attachment prior to judgment. As a result, your ability to enforce judgments against us in the courts of Mexico may be limited. We also do not know whether Mexican courts would enforce
judgments of U.S. courts based on the civil liability provisions of the U.S. federal securities laws. Therefore, even if you were able to obtain a U.S. judgment against us, 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. Finally, 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.

Our
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.

Considerations Related to Mexico

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. In the past, Mexico has experienced several
periods of slow or negative economic growth, high inflation, high interest rates, currency devaluation and other economic problems. These problems may reemerge in the future, and could adversely
affect our business and our ability to service our debt.

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.

Most
of our debt is denominated in U.S. dollars, as is all of the debt of 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 certain of our largest capital expenditures as long-term productive infrastructure projects (which we refer to
as "PIDIREGAS"). In the future, Pemex Finance, Ltd. and we 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.

For
information on 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

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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.

Item 4.    Information on the Company

HISTORY AND DEVELOPMENT

We are the largest company in Mexico, and according toPetroleum Intelligence Weekly, we were the seventh largest
oil and gas company in the world in 2001. In 1938, President Lázaro Cárdenas del Río of Mexico nationalized the 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 the 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 these 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 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. PIDIREGAS expenditures alone totaled Ps. 57.8 billion in 2002 (64% of
our total capital expenditures), Ps. 35.9 billion in 2001 (53% of our total capital expenditures) and Ps. 42.9 billion in 2000 (58% of our total capital expenditures). For 2003, PEMEX
has budgeted approximately Ps. 107.0 billion for PIDIREGAS expenditures (or approximately 74% of our total budgeted capital expenditures). While PIDIREGAS expenditures are considered
off-balance sheet items under Mexican Financial Reporting Standards applicable to Mexican public sector entities, these expenditures and liabilities are included in our Mexican GAAP
financial statements.

The
following table sets forth our capital expenditures for PIDIREGAS for the five years ended December 31, 2002 and the budget for such expenditures for 2003.

14

---

PIDIREGAS Capital Expenditures
Year ended December 31,(1)(2)

|                                   |                                      | 1998 |        | 1999   |     | 2000   |        | 2001 |        | 2002   |     | Budget 2003(3)
|---------------------------------- | ------------------------------------ | ---- | ------ | ------ | --- | ------ | ------ | ---- | ------ | ------ | --- | --------------
|
|                                   | Pemex-Exploration and Production     |      |        |        |     |        |        |      |        |        |     |               
|                                   | Cantarell                            |      | Ps.    | 12,979 |     | Ps.    | 18,337 |      | Ps.    | 20,210 |     | Ps.           
|                                   | Burgos                               |      |        | 4,826  |     |        | 7,307  |      |        | 5,596  |     |               
|                                   | Delta del Grijalva                   |      |        | 795    |     |        | 982    |      |        | 1,431  |     |               
|                                   | 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 Kanaab                      |      |        |       |     |        |       |      |        |       |     |               
|                                   | Integral Poza Rica                   |      |        |       |     |        |       |      |        |       |     |               
|                                   | Integral Yaxche                      |      |        |       |     |        |       |      |        |       |     |               
|                                   |                                      |      |        |        |     |        |        |      |        |        |     |               
|                                   |                                      |      | Total  |        |     | 18,599 |        |      | 26,626 |        |     | 27,236        
|Pemex-Refining                     |                                      |      |        |        |     |        |        |      |        |        |     |               
|                                   | Cadereyta(5)                         |      |        |       |     |        |       |      |        | 15,652 |     |               
|                                   | Madero(6)                            |      |        |       |     |        |       |      |        |       |     |               
|                                   | Salamanca(7)                         |      |        |       |     |        |       |      |        |       |     |               
|                                   | Tula(8)                              |      |        |       |     |        |       |      |        |       |     |               
|                                   | Minatitlán                           |      |        |       |     |        |       |      |        |       |     |               
|                                   |                                      |      |        |        |     |        |        |      |        |        |     |               
|                                   |                                      |      | Total  |        |     |       |        |      |       |        |     | 15,652        
|Pemex-Gas and Basic Petrochemicals |                                      |      |        |        |     |        |        |      |        |        |     |               
|                                   | Cryogenic Plant No. 2                |      |        | 890    |     |        | 653    |      |        |       |     |               
|                                   | Modular Cryogenic Plants in Reynosa  |      |        |       |     |        |       |      |        |       |     |               
|                                   |                                      |      |        |        |     |        |        |      |        |        |     |               
|                                   |                                      |      | Total  |        |     | 890    |        |      | 653    |        |     |              
|                                   |                                      |      |        |        |     |        |        |      |        |        |     |               
|Total PIDIREGAS Expenditures       |                                      | Ps.  | 19,489 |        | Ps. | 27,279 |        | Ps.  | 42,888 |        | Ps. | 35,945        
|                                   |                                      |      |        |        |     |        |        |      |        |        |     |               

---

15

---

During 2002, Pemex-Exploration and Production implemented 26 PIDIREGAS projects. Pemex-Exploration and Production will continue to implement these
projects in 2003, as well as an additional project that was approved by the Mexican Government in 2002. Pemex-Refining will implement a new PIDIREGAS at Minatitlán in 2003 which was
approved by the Mexican Government in 1998. The following table sets forth our approved capital expenditures budget for PIDIREGAS for 2003 through 2006.

PIDIREGAS Approved Budget Capital Expenditures

|                                   |                                         | Year ended December 31,(1)(2)
|---------------------------------- | --------------------------------------- | -----------------------------
|
|
|Pemex-Exploration and Production   |                                         |                              
|                                   | Cantarell                               |                              
|                                   | Strategic Gas Program                   |                              
|                                   | Burgos                                  |                              
|                                   | Antonio J. Bermúdez                     |                              
|                                   | Ku-Maloob-Zaap                          |                              
|                                   | Abkatún Integral                        |                              
|                                   | Chuc                                    |                              
|                                   | Cactus-Sitio Grande                     |                              
|                                   | Pol                                     |                              
|                                   | Bellota-Chinchorro                      |                              
|                                   | Jujo-Tecominoacán                       |                              
|                                   | Caan                                    |                              
|                                   | El Golpe-Puerto Ceiba                   |                              
|                                   | Agua Fría-Coapechaca-Tajín(3)           |                              
|                                   | Taratunich                              |                              
|                                   | Ek-Balam                                |                              
|                                   | Amatitlán-Profeta-Tzapotempa-Vinazco(3) |                              
|                                   | Carmito-Artesa                          |                              
|                                   | Delta del Grijalva                      |                              
|                                   | Arenque                                 |                              
|                                   | Cárdenas                                |                              
|                                   | Och-Uech-Kax                            |                              
|                                   | Integral Batab                          |                              
|                                   | Integral Poza Rica                      |                              
|                                   | Integral Kanaab                         |                              
|                                   | Ayín-Alux                               |                              
|                                   | 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.                          
|                                   |                                         |                              

---

16

---



Non-PIDIREGAS Capital Expenditures.In addition to the Ps. 57.8 billion spent on PIDIREGAS in 2002,
we spent Ps. 33.2 billion in 2002 on other capital expenditures, which represents a 3.7% increase from the Ps. 32.0 billion in non-PIDIREGAS capital expenditures in 2001. Of
the Ps. 33.2 billion in non-PIDIREGAS capital expenditures during 2002, we directed Ps. 22.3 billion (or 67.3% of total non-PIDIREGAS capital expenditures) to
exploration and production programs. Of the Ps. 32.0 billion in non-PIDIREGAS capital expenditures in 2001 and the Ps. 31.4 billion in non-PIDIREGAS capital
expenditures in 2000, we directed Ps. 21.4 billion (or 66.7% of total non-PIDIREGAS capital expenditures) in 2001 and Ps. 19.4 billion (or 61.7% of total
non-PIDIREGAS capital expenditures) in 2000 to exploration and production programs.

Excluding
PIDIREGAS expenditures, we have budgeted a total of Ps. 36.8 billion for capital expenditures in 2003. Of this amount, we expect to direct Ps. 22.6 billion (or
61.3% total non-PIDIREGAS capital expenditures) to exploration and production programs in 2003.

Our
capital expenditures (excluding PIDIREGAS) for the five years ended December 31, 2002 and budgeted for 2003 and 2004 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.                    
|                                   |  |                        
|Payment of PIDIREGAS debt(3)       |  | Ps.                    

---

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 2003, 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 2003 budget objectives are to increase the supply of hydrocarbons,
satisfy natural gas demand and increase refining capacity. Moreover, our increased production goals for 2003 include producing, on average, 9.9% more crude oil and 6% more natural gas as compared to
2002, in order to decrease imports of these products. In addition, Pemex-Gas and Basic Petrochemicals' production of petroleum products is expected to increase by 9.5% as compared to 2002.

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.

17

---

BUSINESS OVERVIEW

Overview by Business Segment

Exploration and Production

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 U.S. dollars, we increased our capital investment in exploration and production activities by 21% in 2002 by financing an array of programs to expand production capacity and efficiency. As
a result of our investments in previous years, our total hydrocarbon production reached a level of approximately 4.13 million barrels of oil equivalent per day in 2002. Pemex-Exploration and
Production's crude oil production increased by 1.6% from 2001 to 2002, averaging 3,177 thousand barrels per day in 2002. Pemex-Exploration and Production's natural gas production (excluding
natural gas liquids) decreased by 1.9% from 2001 to 2002, averaging 4,423 million cubic feet per day in 2002.

Refining

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. Pemex-Refining's atmospheric distillation refining capacity was approximately 1,540 thousand barrels per day during 2002. In 2002,
Pemex-Refining produced 1,276 thousand barrels per day of refined products, as compared to 1,267 thousand barrels per day of refined products in 2001.

Gas and Basic Petrochemicals

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 increased from 3,923 million cubic feet
per day in 2001 to 4,173 million cubic feet per day in 2002. Pemex-Gas and Basic Petrochemicals processed 3,260 million cubic feet per day of sour natural gas in 2002, a 1%
increase from the 3,227 million cubic feet per day of sour natural gas produced in 2001. It produced 418 thousand barrels per day of natural gas liquids in 2002, 5.6% less than 2001
natural gas liquid production 443 thousand barrels per day.

Petrochemicals

Pemex-Petrochemicals
manufactures different petrochemical products, including: (1) methane derivatives, such as ammonia and methanol; (2) ethane, 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 1.8% in 2002, from 5,994 thousand tons in 2001 to 5,889 thousand tons in 2002.

International Trading

In
2002, we sold 1,702 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, PMI 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.
$19,387 million in 2002, including U.S. $13,276 million in crude oil sales.

18

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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.

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:



19

---



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 7.0% in 2001, from 20.2 billion barrels of oil equivalent at December 31,
2000 to 18.8 billion barrels of oil equivalent at December 31, 2001, and decreased by 8.4% in 2002, from 18.8 billion barrels of oil equivalent at December 31, 2001 to
17.2 billion barrels of oil equivalent at December 31, 2002. Mexico's total proved developed and undeveloped dry gas reserves decreased by 6.4% in 2001, from 17.4 trillion cubic feet at
December 31, 2000 to 16.3 trillion cubic feet at December 31, 2001, and decreased by 7.8% in 2002, from 16.3 trillion cubic feet at December 31, 2001 to 15.0 trillion cubic feet
at December 31, 2002.

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)

|                                          |                | 1999                          |        | 2000   |        | 2001   |        | 2002   |       
|----------------------------------------- | -------------- | ----------------------------- | ------ | ------ | ------ | ------ | ------ | ------ | ------
|
|Proved developed and undeveloped reserves |                |                               |        |        |        |        |        |        |       
|                                          | At January 1   |                               | 21,638 |        | 21,519 |        | 20,186 |        | 18,767
|                                          |                | Revisions                     |        | 775    |        | (180   | )      | (144   | )     
|                                          |                | Extensions and discoveries(2) |        | 311    |        | 91     |        | 2      |       
|                                          |                | Production                    |        | (1,205 | )      | (1,244 | )      | (1,277 | )     
|                                          |                |                               |        |        |        |        |        |        |       
|                                          | At December 31 |                               | 21,519 |        | 20,186 |        | 18,767 |        | 17,196
|                                          |                |                               |        |        |        |        |        |        |       
|Proved developed reserves at December 31  |                | 11,414                        |        | 12,312 |        | 12,622 |        | 11,725 |       

---

Dry Gas Reserves

|                                          |                | 1999                          |        | 2000   |        | 2001   |        | 2002   |       
|----------------------------------------- | -------------- | ----------------------------- | ------ | ------ | ------ | ------ | ------ | ------ | ------
|
|Proved developed and undeveloped reserves |                |                               |        |        |        |        |        |        |       
|                                          | At January 1   |                               | 17,054 |        | 18,471 |        | 17,365 |        | 16,256
|                                          |                | Revisions                     |        | 2,427  |        | 3      |        | (78    | )     
|                                          |                | Extensions and discoveries(1) |        | 176    |        | 58     |        | 98     |       
|                                          |                | Production(2)                 |        | (1,186 | )      | (1,167 | )      | (1,129 | )     
|                                          |                |                               |        |        |        |        |        |        |       
|                                          | At December 31 |                               | 18,471 |        | 17,365 |        | 16,256 |        | 14,985
|                                          |                |                               |        |        |        |        |        |        |       
|Proved developed reserves at December 31  |                | 11,127                        |        | 9,713  |        | 8,776  |        | 8,572  |       

---

20

---

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, 2002.

|Field                      |  | Proved
Reserves |   | Developed
Reserves |   | Undeveloped
Reserves |   | Producing
Wells |  | Undeveloped
Locations
|-------------------------- |  | --------------- | - | ------------------ | - | -------------------- | - | --------------- |  | ---------------------
|
|Akal                       |  | 8,379.1         |   | 6,851.7            |   | 1,527.4              |   | 188             |  | 54                   
|Ku-Maloob-Zaap             |  | 1,458.1         |   | 475.7              |   | 982.4                |   | 40              |  | 64                   
|Samaria                    |  | 1,246.2         |   | 944.3              |   | 302.0                |   | 44              |  | 9                    
|Jujo-Tecominoacán          |  | 1,098.0         |   | 922.1              |   | 175.9                |   | 49              |  | 26                   
|Chicontepec                |  | 653.6           |   | 36.6               |   | 617.0                |   | 359             |  | 1,406                
|Iride                      |  | 626.2           |   | 355.4              |   | 270.8                |   | 18              |  | 23                   
|Cunduacán                  |  | 487.8           |   | 345.0              |   | 142.8                |   | 17              |  | 8                    
|Sihil                      |  | 304.8           |   | 21.8               |   | 283.0                |   | 0               |  | 9                    
|Caan                       |  | 276.7           |   | 263.5              |   | 13.2                 |   | 22              |  | 1                    
|Chuc                       |  | 242.1           |   | 212.5              |   | 29.6                 |   | 15              |  | 6                    
|Oxiacaque                  |  | 260.9           |   | 156.0              |   | 104.9                |   | 7               |  | 2                    
|Cárdenas                   |  | 97.1            |   | 47.2               |   | 49.9                 |   | 17              |  | 2                    
|Sinán                      |  | 203.7           |   | 0.0                |   | 203.7                |   | 0               |  | 22                   
|Muspac                     |  | 202.2           |   | 196.5              |   | 5.6                  |   | 23              |  | 1                    
|Poza Rica                  |  | 114.6           |   | 96.1               |   | 18.4                 |   | 164             |  | 20                   
|Paredón                    |  | 181.7           |   | 62.0               |   | 119.7                |   | 7               |  | 0                    
|Ayín                       |  | 188.5           |   | 0.0                |   | 188.5                |   | 0               |  | 14                   
|Cactus                     |  | 140.7           |   | 68.0               |   | 72.7                 |   | 16              |  | 9                    
|Abkatún                    |  | 123.5           |   | 101.8              |   | 21.7                 |   | 17              |  | 2                    
|Culebra                    |  | 66.9            |   | 37.8               |   | 29.1                 |   | 290             |  | 78                   
|Balam                      |  | 113.9           |   | 93.5               |   | 20.4                 |   | 4               |  | 2                    
|Sen                        |  | 65.5            |   | 65.5               |   | 0.0                  |   | 11              |  | 3                    
|Nohoch                     |  | 10.1            |   | 10.1               |   | 0.0                  |   | 1               |  | 0                    
|Pol                        |  | 41.7            |   | 41.7               |   | 0.0                  |   | 14              |  | 0                    
|Kutz                       |  | 86.5            |   | 86.5               |   | 0.0                  |   | 2               |  | 0                    
|Caparroso-Pijije-Escuintle |  | 95.5            |   | 76.2               |   | 19.3                 |   | 14              |  | 4                    
|Luna-Palapa                |  | 26.5            |   | 26.5               |   | 0.0                  |   | 9               |  | 0                    
|Cuitláhuac                 |  | 46.7            |   | 28.1               |   | 18.6                 |   | 155             |  | 39                   
|Chac                       |  | 24.3            |   | 24.3               |   | 0.0                  |   | 2               |  | 0                    
|Arcos                      |  | 20.6            |   | 19.7               |   | 0.9                  |   | 121             |  | 6                    
|Arcabuz                    |  | 14.8            |   | 8.1                |   | 6.7                  |   | 73              |  | 20                   
|Lum                        |  | 42.1            |   | 0.0                |   | 42.1                 |   | 0               |  | 3                    
|Ek                         |  | 36.1            |   | 36.1               |   | 0.0                  |   | 1               |  | 0                    
|Ixtoc                      |  | 27.9            |   | 27.9               |   | 0.0                  |   | 2               |  | 0                    
|Bacab                      |  | 22.4            |   | 22.4               |   | 0.0                  |   | 3               |  | 0                    
|Platanal                   |  | 5.5             |   | 5.5                |   | 0.0                  |   | 2               |  | 1                    
|Escarbado                  |  | 9.2             |   | 9.2                |   | 0.0                  |   | 2               |  | 0                    
|Tizón                      |  | 8.6             |   | 4.4                |   | 4.2                  |   | 2               |  | 0                    
|                           |  |                 |   |                    |   |                      |   |                 |  |                      
|Total                      |  | 17,050.3        |   | 11,779.7           |   | 5,270.5              |   | 1,711           |  | 1,834                
|                           |  |                 |   |                    |   |                      |   |                 |  |                      
|Mexico's proved reserves   |  | 20,077.3        |   | 13,373.2           |   | 6,704.1              |   |                 |  |                      
|Percentage                 |  | 85              | % | 88                 | % | 79                   | % |                 |  |                      

---

21

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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 2002, we completed
2,498 exploration and development wells. During 2002, the average success rate for exploration wells was 50%, and the average success rate for development wells was 88%. From 1998 to 2002, we
discovered five new crude oil fields and 43 new natural gas fields, bringing the total number of our crude oil and natural gas fields in production to 310 at the end of 2002.

While
most of our offshore production in the Gulf of Mexico occurs in waters less than 100 meters deep, the 2002 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 in the Cantarell complex, Ku-Maloob-Zaap in the Northeast Marine region and Caan, Abkatun
and Chuc in the Southwest Marine region. The Cantarell complex, for example, produced 1,879 thousand barrels per day of crude oil in 2002, or 59.1% of our total 2002 crude oil production, and
688 million cubic feet per day of natural gas in 2002, or 15.6% of our total 2002 natural gas production.

The
following table summarizes our drilling activity for the five years ended December 31, 2002.

|                                                           |                    | Year Ended December 31,
|---------------------------------------------------------- | ------------------ | -----------------------
|
|Wells drilled                                              |                    | 233                    
|Wells completed                                            |                    | 203                    
|                                                           | Exploratory wells  |                        
|                                                           |                    | Success rate %         
|                                                           | Development wells  |                        
|                                                           |                    | Success rate %         
|Producing wells at end of period(1)                        |                    | 4,551                  
|                                                           | Marine Region(1)   |                        
|                                                           | Southern Region(1) |                        
|                                                           | Northern Region(1) |                        
|Fields in production                                       |                    | 324                    
|                                                           | Marine Region      |                        
|                                                           | Southern Region    |                        
|                                                           | Northern Region    |                        
|Drilling Rigs                                              |                    | 60                     
|Kilometers drilled                                         |                    | 728                    
|Average depth by well (meters)                             |                    | 3,907                  
|Discovered Fields(2)                                       |                    | 6                      
|                                                           | Crude Oil          |                        
|                                                           | Natural gas        |                        
|Crude oil and natural gas output by well (barrels per day) |                    | 897                    

---

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 31,2000

2001

2002(U.S. dollars per barrel)$2.97

$3.34

$3.04


---

22

---

Our lifting costs decreased by 9% from 2001 to 2002 as a result of a decrease in the average purchase cost of gas used for pneumatic pumping, from
U.S. $3.88 per million cubic feet in 2001 to U.S. $2.78 per million cubic feet in 2002.



During the year 2002, we discovered new sources of crude oil and natural gas reserves in the Southwest Marine region, the Northern region and the Southern region.
The new discoveries yielded a total of 124.8 million barrels of crude oil equivalent of proved reserves.

In
the Southwestern Marine region, drilling of the Hap-1, Chukúa-1, Akpul-1 and Misón-101 wells led to the
addition of 133.9 billion cubic feet of proved natural gas, and 42.2 million barrels of proved oil reserves. The drilling of wells in the Northern region led to the addition of
237.2 billion cubic feet of proved natural gas reserves. The main discoveries in the Burgos basin are Enlace and Pamorana, which account for 24.2 billion cubic feet of proved natural gas
reserves. Other important discoveries in Veracruz and Poza Rica (such as Lankahuasa, which is described below) led to the addition of 60.5 and 131.5 billion cubic feet of natural gas,
respectively.

During
2002, the drilling of extension wells resulted in a net reduction of 60 million barrels of crude oil and 145 billion cubic feet of natural gas, resulting from an
increase of 15 million barrels of crude oil and 39 billion cubic feet of natural gas in Playuela and Cocuite, and a decrease of 75 million barrels of crude oil and
184 billion cubic feet of natural gas in Sihil.



In 2002, we invested Ps. 71,874 million in exploration and production, as compared to Ps. 57,302 million in 2001, representing a 25.4% 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 2002, Pemex-Exploration
and Production's PIDIREGAS investments totaled approximately Ps. 49,557 million, consisting of Ps. 24,397 million in investments in the Cantarell fields, Ps. 9,383 million for
development of the Burgos natural gas fields, Ps. 8,967 million in the Strategic Gas Program and Ps. 1,439 in the Delta del Grijalva project. During 2002, these four project investments
amounted to 89.2% of all PIDIREGAS investments in exploration and production. The remaining 10.8% amounted to Ps. 5,371 million, which was invested in the 22 new projects commenced in 2002. Of
these 22 new projects, we invested Ps. 865 million in Ku-Maloob-Zapp, Ps. 720 million in Pol and Ps. 529 million in Abkatun Integral. The Cantarell,
Burgos, Delta de Grijalva and the Strategic Gas Program PIDIREGAS are described below.

Cantarell.Pemex-Exploration and Production invested Ps. 20,210 million in 2000, Ps. 25,867 million in 2001 and
Ps. 24,397 million in 2002 in the development of the Cantarell reservoirs in the Marine region. For 2003, we have budgeted Ps. 25,882 million for Cantarell investments. By the end of
2003, we expect our investments in the Cantarell project to total approximately U.S. $13.7 billion.

On
October 10, 1997, we awarded a build-own-operate contract for a nitrogen cryogenic plant at the Cantarell oil and natural gas field to a consortium
formed by BOC Holdings, Linde, Marubeni, West Coast Energy and ICA Fluor Daniel. Under this contract, the consortium is responsible for the financing, design, construction and operation of the plant.
The plant cost approximately 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. During 2002, Pemex-Exploration and Production paid
approximately U.S. $167 million under this contract for a total volume of approximately 320 billion cubic feet of nitrogen. We plan to inject approximately 1.2 million cubic feet
per day into the Cantarell reservoirs until 2009. Thereafter, the volume of nitrogen required is expected to decrease gradually to 0.5 billion cubic feet per day by 2015. The existing surplus
of nitrogen will be injected in other fields of the marine region. 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 increasing the productive life of the wells and the volume of oil recovered. In the event that the agreement is

23

---

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 have been awarded to Dowell-Schlumberger
México (worth U.S. $108 million), Industrial Perforadora de Campeche (worth U.S. $96.4 million) and Halliburton International Inc. (worth U.S. $71 million)
for this project. From 2000 to 2002, exploration activities and reclassification of reserves increased estimated proved reserves by 89.3 million barrels of oil equivalent. Therefore, although
production in this period was 216 million barrels of oil equivalent, reserves were only reduced by 126.7 million barrels of oil equivalent. We invested Ps. 5,596 million in 2000,
Ps. 7,018 million in 2001 and Ps. 9,383 million in 2002 in the Burgos project. For 2003, we anticipate that our investments in this project will amount to Ps. 9,180 million and
that our total accumulated investments will reach approximately U.S. $4.7 billion.

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. In 2002, our investment increased to U.S. $8,456 million to include three new exploratory projects: Integral Tampico
Misantla Sur de Burgos, Veracruz Marino and Cazones. The purpose of the program is to increase Mexico's 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 50% of investments with the goal of increasing proved reserves in sixteen different exploratory natural gas and
integral gas projects by 2,412 million barrels per year of oil equivalent, from current levels. Finally, development of newly discovered fields will represent 11% of the investment amount. In
2002, Pemex-Exploration and Production invested Ps. 8,967 million in the program, as compared with Ps. 1,594 million in 2001. For 2003, we expect to invest Ps. 23.4 billion, which
would bring our total investment in the program to approximately U.S. $3.4 billion. In 2002, average production was 115 million cubic feet per day of natural gas. Since 2001, 24
exploratory wells demonstrated offshore and onshore gas potential, resulting in a 50% exploratory success ratio. Important discoveries such as Lankahuasa (offshore) and Playuela in the Veracruz basin
(onshore) are currently under assessment and delineation in order to start new field development activities for 2003.

Delta del Grijalva.In 1998, Pemex-Exploration and Production initiated a 15-year, U.S. $600 million
investment project named Delta del Grijalva, which involves the continued 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. 1,431 million in 2000, Ps. 1,466 million in 2001 and Ps.
1,439 million in 2002 in the Delta del Grijalva project. In 2003, we expect to invest Ps. 755 million in this project, bringing our total investment in Delta del Grijalva to U.S.
$720 million.

Non-PIDIREGAS Investments.In addition to PIDIREGAS investments, Pemex-Exploration and Production invested Ps.
22,317 million in non-PIDIREGAS expenditures in 2002, of which Ps. 4,891, or 22%, was invested in strategic projects, Ps. 7,790 million, or 35%, in general operating
improvements and Ps. 9,636 million, or 43%, in payments of principal and interest on PIDIREGAS debt. Our investments in strategic projects consisted of Ps. 1,278 million in oil and gas
exploration and Ps. 3,613 million in general field development and facilities.

2003 Exploration and Production Investment Budget.For 2003, Pemex-Exploration and Production anticipates investing Ps.
22,561 million, excluding PIDIREGAS expenditures. Approximately Ps. 4,270 million or 19% 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 1998 to 2002. The remaining 81% will be allocated to operating projects as well
as to projects relating to maintenance facilities, industrial safety and environmental projects. In addition, Ps. 13,561 million, or 60%, of the total non-PIDIREGAS investments will
be allocated to payments of principal and interest on PIDIREGAS debt. In addition to these non-PIDIREGAS investments, the 2003 budget includes all of the 27 on-going PIDIREGAS
strategic exploration and production projects for a total PIDIREGAS budget of approximately Ps. 88,968 million. This amount includes Ps. 25,882 million for Cantarell, Ps.
23,368 million for the Strategic Gas Program, Ps. 9,180 million for Burgos,

24

---

Ps.
755 million for Delta del Grijalva and Ps. 29,782 million for the 24 new PIDIREGAS. Of these new PIDIREGAS approved and begun in 2002, Ps. 3,946 million has been allocated to
Antonio J. Bermúdez, Ps. 3,799 million to Ku-Maloob-Zaap, Ps. 2,334 million to Abkatun Integral and Ps. 2,332 million to Chuc.



Following the December 2001 announcement of our Multiple Services Contracts ("MSC") program, three generic models of the MSC were developed based on our
interactions with different industry participants. The objective of the program is to provide a transparent contractual framework that promotes an efficient execution of public works, in order to
develop the natural gas reserves in the Burgos basin. This development should increase Mexico's supply of natural gas nationwide. The MSC is a public works contract based on unit prices, in which
Pemex-Exploration and Production has a right to all extracted hydrocarbons and works performed. A distinctive feature of this model is that, regardless of the production level, the contractor only
receives a cash payment based on the unit prices for the works performed and the services rendered. The MSC program should lower PEMEX's costs by consolidating a number of different services rendered
into a single contract. The first round of MSC bids, corresponding to works and services necessary for natural gas production in the Burgos basin area, will take place in 2003.



In 2002, we produced an average of 3,177 thousand barrels per day of crude oil, 1.6% greater than our average daily production in 2001 of
3,127 thousand barrels per day of crude oil. The increase was mainly due to a crude oil production increase in the Cantarell project of 179 thousand barrels per day, 11% greater than its
average daily production in 2001. This average daily production increase was partially offset by a decrease in light crude oil production in the Marine and other regions.

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.

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 2002, 68.2% of Pemex-Exploration and Production's total production of crude oil consisted
of heavy crudes and 31.8% consisted of light and very light crudes. The Marine region yields mostly heavy crude oil (67.0% of overall production), although significant volumes of light crude oil are
also produced (15.0% of overall production). The Southern region yields mainly light and very light crudes (together, 15.7% of overall production), whereas the Northern region yields mostly heavy
crude oil (2.4% of overall production).

25

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The following table sets forth our annual crude oil production rates for the five years ended December 31, 2002.

|                      |                 | Year Ended December 31, |         |         |        
|--------------------- | --------------- | ----------------------- | ------- | ------- | -------
|
|
|
|Marine region         |                 |                         |         |         |        
|                      | Heavy crude oil |                         | 1,605.4 |         | 1,516.3
|                      | Light crude oil |                         | 751.8   |         | 721.5  
|                      |                 |                         |         |         |        
|                      |                 |                         | Total   |         | 2,357.2
|Southern region       |                 |                         |         |         |        
|                      | Heavy crude oil |                         | 0.2     |         |       
|                      | Light crude oil |                         | 620.6   |         | 587.2  
|                      |                 |                         |         |         |        
|                      |                 |                         | Total   |         | 620.8  
|Northern region       |                 |                         |         |         |        
|                      | Heavy crude oil |                         | 53.3    |         | 47.2   
|                      | Light crude oil |                         | 39.1    |         | 33.9   
|                      |                 |                         |         |         |        
|                      |                 |                         | Total   |         | 92.4   
|Total heavy crude oil |                 | 1,658.9                 |         | 1,563.5 |        
|Total light crude oil |                 | 1,411.5                 |         | 1,342.6 |        
|                      |                 |                         |         |         |        
|                      | Total crude oil |                         | 3,070.5 |         | 2,906.0
|                      |                 |                         |         |         |        

---

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

In 2002, the Marine region's offshore facilities, which are located in the Campeche Sound in the Gulf of Mexico, produced 82% of Mexico's crude
oil. Approximately 16% of crude oil production came from onshore facilities in the Southern region. Inland facilities in the Northern region accounted for the remaining 2% of total crude oil
production. Due to the high productivity of certain wells, 13 fields accounted for 85.3% of Mexico's crude oil production in 2002.

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 2002, the average production level for this region was
2,604 thousand barrels per day. The Marine region's production area includes 20 oil fields that 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 2002, production in the Southern region totaled 498 thousand barrels per day. This production area included 94 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 2002, production in the Northern region totaled 75 thousand barrels of crude
oil per day and 1,268 million cubic feet of natural gas per day. This production area included 196 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.

26

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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, 2002,
there were a total of 354 wells drilled, 193 of which were producing. During 2002, the complex produced an average of 1.9 million barrels of crude oil and 687.3 million cubic feet of
natural gas per day. As of December 31, 2002, cumulative production was 9.2 billion barrels of crude oil and 3.8 trillion cubic feet of natural gas. Proved hydrocarbon reserves totaled
7.6 billion barrels of crude oil and 3.8 trillion cubic feet of natural gas. Total proved reserves were 8.5 billion barrels of crude oil equivalent, of which 7.0 billion were
developed.

Burgos Project.The Burgos fields of Northern Mexico produced approximately 1.0 billion cubic feet of natural gas per
day in 2002. This complex of fields is the largest producer of non-associated gas in Mexico. The most important producers are the Arcabuz-Culebra, Cuitláhuac and Arcos
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-Pijije-Escuintle, Escarbado, Luna-Palapa, Sen and Tizón. During 2002, the fields produced an average of 69.5 thousand barrels of
crude oil and 250.6 million cubic feet of natural gas per day. The most important producers are Sen, Luna-Palapa and Caparroso-Pijije-Escuintle.



27

---





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, 2002,
there were a total of 380 wells drilled, 88 of which were producing. During 2002, the complex produced an average of 142.8 thousand barrels of crude oil and 246.4 million cubic feet of
natural gas per day. As of December 31, 2002, cumulative production was 2.5 billion barrels of crude oil and 3.3 trillion cubic feet of natural gas, and proved hydrocarbon reserves
totaled 1.8 billion barrels of crude oil and 3.4 trillion cubic feet of natural gas. Total proved reserves were 2.6 billion barrels of crude oil equivalent, of which 1.8 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, 2002, there were a total of 103 wells drilled, 49 of which were producing. During
2002, the field produced an average of 82.3 thousand barrels of crude oil and 101.5 million cubic feet of natural gas per day. As of December 31, 2002, cumulative production was
940.2 million barrels of crude oil and 1.0 trillion cubic feet of natural gas, and proved hydrocarbon reserves totaled 686.7 million barrels of crude oil and 1.6
trillion cubic feet of natural gas. Total proved reserves were 1.1 billion barrels of crude oil equivalent, of which 922.1 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, 2002, there were a total of 30 wells drilled, 23 of which were producing. During 2002, the field produced an average of
5.7 thousand barrels of crude oil and 234.7 million cubic feet of natural gas per day. As of December 31, 2002, cumulative production was 89.2 million barrels of crude oil
and 1.4 trillion cubic feet of natural gas. Total proved reserves were 202.2 million barrels of crude oil equivalent, of which 196.5 million were developed. Proved hydrocarbon reserves
totaled 16.0 million barrels of crude oil and 0.8 trillion cubic feet of natural gas.

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, 2002, there were a total of 188 wells drilled, 35 of which were injectors. Currently, there are 46
producing wells. During 2002, the complex produced an average of 228.9 thousand barrels of crude oil and 235.6 million cubic feet of natural gas per day. As of December 31, 2002,
cumulative production was 3.7 billion barrels of crude oil and 3.3 trillion cubic feet of natural gas. Proved hydrocarbon reserves totaled 338.1 million barrels of crude oil and
306.9 billion cubic feet of natural gas. Total proved reserves were 407.3 million barrels of crude oil equivalent, of which 356.0 million were developed.

Caan Field.This field is located in the Southwestern offshore region and covers an area of 46 square kilometers. As of
December 31, 2002, there were a total of 41 wells drilled, 22 of which were producing. During 2002, the field produced an average of 132.8 thousand barrels of crude oil and
214.9 million cubic feet of natural gas per day. As of December 31, 2002, cumulative production was 633.6 million barrels of crude oil and 1.1 trillion cubic feet of natural gas.
Proved hydrocarbon reserves totaled 188.4 million barrels of crude oil and 413.9 billion cubic feet of natural gas. Total proved reserves were 276.7 million barrels of crude oil
equivalent, of which 263.5 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, 2002, there were a total of 61 wells drilled, 40 of which were producing. During 2002, this complex produced an average of
241.7 thousand barrels of crude oil and 124.9 million cubic feet of natural gas per day. As of December 31, 2002, cumulative production was 1.7 billion barrels of crude oil
and 896.5 billion cubic feet of natural gas. Proved hydrocarbon reserves totaled 1.2 billion barrels of crude oil and 852.1 billion cubic feet of natural gas. Total proved
reserves were 1,458.1 million barrels of crude oil equivalent, of which 475.7 million were developed.

28

---

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, 2002, there were a total of 35 wells drilled, five of which were producing. During
December 31, 2002, the fields produced an average of 13.1 thousand barrels of crude oil and 3.2 million cubic feet of natural gas per day. As of December 31, 2002,
cumulative production was 108.0 million barrels of
crude oil and 26.5 billion cubic feet of natural gas. Proved hydrocarbon reserves totaled 141.6 million barrels of crude oil and 34.1 billion cubic feet of natural gas. Total
proved reserves were 150.0 million barrels of crude oil equivalent, 129.6 million of which were developed.

Paleocanal de Chicontepec.This complex of fields (which we refer to as "Chicontepec") is part of the Northern region of our
operations and is divided into 29 areas, which extend over an area of 3,731 square kilometers. As of December 31, 2002, there were a total of 1,140 wells drilled, 359 of which were producing.
During 2002, Chicontepec produced an average of 6.7 thousand barrels of crude oil and 18.4 million cubic feet of natural gas per day. As of December 31, 2002, cumulative
production was 113.3 million barrels of crude oil and 201.7 billion cubic feet of natural gas. Proved hydrocarbon reserves totaled 478.7 million barrels of crude oil and 1.0
trillion cubic feet of natural gas. Total proved reserves were 653.6 million barrels of crude oil equivalent, of which 36.6 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 2002, this pipeline network consisted of approximately 28,558 kilometers of pipe, of which 2,810 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 2002, domestic consumption of crude oil amounted to approximately 1,447 thousand barrels per day, which represented 46% 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 82% of exported crude oil
volume sold by PMI in 2002, but only 41% of domestic consumption.

The
following table sets forth crude oil distribution.

Crude Oil Distribution

|                                       |                                         | At December 31, |         |         |         |         |        
|-------------------------------------- | --------------------------------------- | --------------- | ------- | ------- | ------- | ------- | -------
|
|
|
|Production                             |                                         | 3,070.5         |         | 2,906.0 |         | 3,012.0 |        
|Distribution                           |                                         |                 |         |         |         |         |        
|                                       | Refineries                              |                 | 1,154.5 |         | 1,132.5 |         | 1,126.9
|                                       | Products under processing agreements(1) |                 |        |         | 56.7    |         | 103.7  
|                                       | Petrochemicals                          |                 | 163.4   |         | 149.6   |         | 136.0  
|                                       | Exports(2)                              |                 | 1,738.0 |         | 1,551.2 |         | 1,619.8
|                                       |                                         |                 |         |         |         |         |        
|                                       |                                         |                 | Total   |         | 3,055.8 |         | 2,890.0
|                                       |                                         |                 |         |         |         |         |        
|Stock changes, statistical differences |                                         | 14.6            |         | 16.1    |         | 25.6    |        

---

|Note: Numbers may not total due to rounding.
|--------------------------------------------
|(1)                                         
|(2)                                         
|                                            
|Source: Pemex-Exploration and Production.   

29

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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 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:



30

---



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          |                
|                   | Cracking                     |                
|                   | Visbreaking                  |                
|                   | Reforming                    |                
|                   | Hydrotreatment               |                
|                   | Alkylation and isomerization |                

Source: Base de Datos Institucional (Pemex BDI).

At the end of 2002, 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 2002, our refineries processed
1,245 thousand barrels per day of crude oil (196 thousand barrels at Cadereyta, 108 thousand barrels at Madero, 170 thousand barrels at Minatitlán,
185 thousand barrels at Salamanca, 306 thousand barrels at Salina Cruz and 280 thousand barrels at Tula), which consisted of 833 thousand barrels per day of Olmeca and
Isthmus crude oil and 413 thousand barrels per day of Maya crude oil.

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 included 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 1,276 thousand barrels per day of refined products (including dry gas by-products of the
refining process) in 2002, an increase of 0.7% from 2001 levels.

31

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The following table sets forth, by category, Pemex-Refining's production of refined products from 1998 through 2002.

Pemex-Refining Production

|                        |                         | Year Ended December 31,   |       |         |      
|----------------------- | ----------------------- | ------------------------- | ----- | ------- | -----
|
|
|
|Refinery crude oil runs |                         | 1,283.0                   |       | 1,228.0 |      
|Refined products        |                         |                           |       |         |      
|                        | Liquefied petroleum gas |                           | 28.8  |         | 31.0 
|                        | Gasoline                |                           |       |         |      
|                        |                         | Nova (leaded)/Base(1)     |       | 52.5    |      
|                        |                         | Pemex Magna               |       | 347.9   |      
|                        |                         | Pemex Premium             |       | 9.7     |      
|                        |                         | Others                    |       | 1.8     |      
|                        |                         |                           |       |         |      
|                        |                         |                           | Total |         | 411.9
|                        | Kerosenes               |                           |       |         |      
|                        |                         | Jet fuel                  |       | 57.1    |      
|                        |                         | Other kerosenes           |       | 1.9     |      
|                        |                         |                           |       |         |      
|                        |                         |                           | Total |         | 59.0 
|                        | Diesel                  |                           |       |         |      
|                        |                         | Pemex Diesel              |       | 250.7   |      
|                        |                         | Low sulphur diesel        |       | 23.0    |      
|                        |                         | Others                    |       | 16.3    |      
|                        |                         |                           |       |         |      
|                        |                         |                           | Total |         | 290.0
|                        | Fuel oil                |                           | 445.8 |         | 427.9
|                        | Other refined products  |                           |       |         |      
|                        |                         | Industrial gas oil        |       | 5.7     |      
|                        |                         | Asphalts                  |       | 29.7    |      
|                        |                         | Lubricants                |       | 5.4     |      
|                        |                         | Paraffins                 |       | 1.8     |      
|                        |                         | Still gas                 |       | 49.2    |      
|                        |                         | Other refined products(2) |       | 1.7     |      
|                        |                         |                           |       |         |      
|                        |                         |                           | Total |         | 93.5 
|                        |                         |                           |       |         |      
|Total refined products  |                         | 1,329.0                   |       | 1,284.4 |      
|                        |                         |                           |       |         |      

---

|Note: Numbers may not total due to rounding.
|--------------------------------------------
|(1)                                         
|(2)                                         
|Source: Pemex BDI.                          

Fuel oil, automotive gasoline and diesels represented the bulk of Pemex-Refining's production. In 2002, fuel oil represented 35%, gasoline
represented 31% 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 2002. The
remainder of Pemex-Refining's production consisted of a variety of other refined products.

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 86% in 1998 to 92% in 2002. We have also promoted liquefied petroleum gas as an environmentally sound substitute fuel for gasoline in motor vehicles.

32

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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.

Over
the five years ended December 31, 2002, 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               |                    |                         |          |          |         
|                       | Pemex Magna        |                         | Ps.      | 36,426.3 |         
|                       | Pemex Premium      |                         |          | 3,012.5  |         
|                       | Aviation fuels     |                         |          | 98.9     |         
|                       | Others             |                         |          | 132.5    |         
|                       |                    |                         |          |          |         
|                       |                    | Total                   |          |          | 39,670.2
|Kerosenes              |                    |                         |          |          |         
|                       | Jet fuel           |                         |          | 2,856.4  |         
|                       | Other kerosenes    |                         |          | 80.8     |         
|                       |                    |                         |          |          |         
|                       |                    | Total                   |          |          | 2,937.2 
|Diesel                 |                    |                         |          |          |         
|                       | Pemex Diesel       |                         |          | 15,018.1 |         
|                       | Others             |                         |          | 3,400.3  |         
|                       |                    |                         |          |          |         
|                       |                    | Total                   |          |          | 18,418.3
|Fuel oil               |                    |                         |          |          |         
|                       |                    | Total                   |          |          | 16,388.6
|Other refined products |                    |                         |          |          |         
|                       | Industrial gas oil |                         |          | 349.7    |         
|                       | Asphalts           |                         |          | 808.9    |         
|                       | Lubricants         |                         |          | 626.2    |         
|                       | Paraffins          |                         |          | 153.8    |         
|                       | Others             |                         |          | 1.1      |         
|                       |                    |                         |          |          |         
|                       |                    | Total                   |          |          | 1,939.7 
|                       |                    |                         |          |          |         
|Total oil products     |                    | Ps.                     | 79,354.0 |          | Ps.     
|                       |                    |                         |          |          |         
|Petrochemicals(2)      |                    | Ps.                     | 151.9    |          | Ps.     

---

|Notes: Numbers may not total due to rounding.
|---------------------------------------------
|(1)                                          
|(2)                                          
|Source: Pemex BDI.                           

The largest consumers of fuels in Mexico are the Federal Electricity Commission and our subsidiary entities. The Federal Electricity Commission
consumed approximately 80% of our fuel oil production during 2002 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 differentials. In addition, the
price of the fuel oil is discounted by a commercial margin on each cubic meter of fuel oil. In 2002, 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 2002 was Ps.
21,356 million and represented 6.8% of our total consolidated domestic sales revenues.

Our
domestic sales of refined oil products decreased by 4.8% (or Ps. 6,745 million) in 2002 from 2001 levels. This decrease was due to a 5.8% decrease in international prices of
refined products (excluding fuel oil). For

33

---

example,
from 2001 to 2002 the price of automotive gasoline fell by 5.0%, the price of diesel engine fuel fell by 8.6% and the price of jet fuel fell by 5.6%.

The
volume of our domestic gasoline sales in 2002 increased by 2.6%, from 551.8 thousand barrels per day in 2001 to 566.2 thousand barrels per day in 2002. The volume of
our domestic diesel sales decreased by 1.8%, from 275.8 thousand barrels per day in 2001 to 270.7 thousand barrels per day in 2002, due to a decrease in industrial demand because of a
reduction in Mexico's industrial activity. In addition, the volume of our domestic sales of fuel oil decreased by 14.5%, from 474.9 thousand barrels per day to 406.2 thousand barrels per
day, primarily due to a decrease in demand from the Federal Electricity Commission and a decrease in industrial demand as a result of a decrease in Mexico's industrial production.

The
volume of Pemex-Refining's domestic sales of refined products for the five-year period ended December 31, 2002 was distributed as follows:

Volume of Domestic Sales

|                   |                    | Year Ended December 31, |         |       |        
|------------------ | ------------------ | ----------------------- | ------- | ----- | -------
|
|
|
|Oil Products       |                    |                         |         |       |        
|                   | Gasoline           |                         |         |       |        
|                   |                    | Pemex Magna             |         | 481.2 |        
|                   |                    | Pemex Premium           |         | 30.5  |        
|                   |                    | Aviation fuels          |         | 0.5   |        
|                   |                    | Others                  |         | 1.1   |        
|                   |                    |                         |         |       |        
|                   |                    |                         | Total   |       | 513.4  
|                   | Kerosenes          |                         |         |       |        
|                   |                    | Jet fuel                |         | 52.4  |        
|                   |                    | Other kerosenes         |         | 0.8   |        
|                   |                    |                         |         |       |        
|                   |                    |                         | Total   |       | 53.2   
|                   | Diesel             |                         |         |       |        
|                   |                    | Pemex Diesel            |         | 225.8 |        
|                   |                    | Others                  |         | 50.4  |        
|                   |                    |                         |         |       |        
|                   |                    |                         | Total   |       | 276.2  
|                   | Fuel oil           |                         |         |       |        
|                   |                    |                         | Total   |       | 489.1  
|Other oil products |                    |                         |         |       |        
|                   |                    | Industrial gas oil      |         | 6.5   |        
|                   |                    | Asphalts                |         | 17.1  |        
|                   |                    | Lubricants              |         | 5.2   |        
|                   |                    | Paraffins               |         | 1.3   |        
|                   |                    | Others                  |         | 1.0   |        
|                   |                    |                         |         |       |        
|                   |                    |                         | Total   |       | 31.1   
|                   |                    |                         |         |       |        
|                   | Total oil products |                         | 1,363.0 |       | 1,346.1
|                   |                    |                         |         |       |        
|Petrochemicals(1)  |                    | 51.0                    |         | 84.5  |        

---

|Note: Numbers may not total due to rounding
|-------------------------------------------
|(1)                                        
|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 2001 and 2002. More than 99% 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 development of marketing and customer service programs. At the end of 2002, there were 5,564 retail service stations in Mexico, of
which 5,555 were privately owned and operated as franchises.

34

---



Over the last seven 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 2002, Pemex-Refining imported approximately 89.7 thousand barrels per day of unleaded gasoline, which represented 15.9% of total domestic demand for unleaded gasoline in that
year.

Non-PIDIREGAS Investments.In 2002, Pemex-Refining invested Ps. 7,112.8 million, as compared to Ps.
6,537.7 million in 2001, representing an 8.8% increase due to an increase in amortization payments on Cadereyta PIDIREGAS debt and investments in industrial plant maintenance. Strategic
projects, in addition to those described above, comprised Ps. 1,604.4 million of total non-PIDIREGAS investment, principal and interest payments on the Cadereyta PIDIREGAS debt
comprised Ps. 1,219.6 million, operating projects represented Ps. 3,332.7 million and the remaining Ps. 956.1 million was dedicated mainly to acquisitions of equipment, research
and development and complementary investments.

Cadereyta Project.In November 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. We expect the project to 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 2002, the project was certified as 99.31% complete.
Pemex-Refining makes semi-annual amortization payments on June 15 and December 15 of each year, the first of which was a payment of U.S. $53.2 million on
December 15, 2000. During 2002, Pemex-Refining
made amortization payments totaling U.S. $242.4 million. Semi-annual amortization payments will continue until June 15, 2010.

Madero Project.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 was U.S. $1.8 billion and involved the construction of ten new plants and the upgrading of seven others at the Madero complex in the state of Tamaulipas in
northeastern Mexico. The project increased the Madero refinery's processing capacity for heavy crude oil (Maya) by 85,000 barrels per day, increased gasoline production by 33,000 barrels per day,
increased middle distillates (diesel and jet fuel) production by 13,000 barrels per day and reduced production of high sulphur fuel oil by 13,000 barrels per day. The project was completed on
October 24, 2002. The first amortization payment will be made during 2003, and the last payment will be made in 2022.

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 quality, whereas the Cadereyta and Madero projects are dedicated to increasing heavy crude
oil processing capacities through residual conversion. The construction period for the Tula and Salamanca projects lasted 29 and 34 months, respectively. Total costs were U.S.
$160.5 million for the Tula project and U.S. $257.4 million for the Salamanca project. The Tula project was completed on August 27, 2002, and the Salamanca project was completed
on January 9, 2003, reaching 99.47% completion at the end of 2002. The first amortization payments for each project will be made during 2003 and the last payments will be made in 2022.

Minatitlán Project.This refining project is intended to increase production of high quality gasoline and
middle distillates and to improve the crude oil blend. The project consists of six bidding packages, one of which was published on May 29, 2003, and the remaining five are expected to be
published throughout 2003. The construction period is expected to last approximately 43 months following the financial closing.

2003 Refining Investment Budget.For 2003, Pemex-Refining has budgeted Ps. 16,542 million for investment in PIDIREGAS.
In addition, Pemex-Refining has budgeted Ps. 8,319.3 million for investments in 2003, excluding expenditures related to PIDIREGAS. This non-PIDIREGAS budget includes Ps.
2,912.7 million, in principal and interest payments on PIDIREGAS debt, or 35% of the total budget. Pemex-Refining will invest 14% of

35

---

the
total amount to expand and upgrade refineries, 12% in environmental and industrial safety projects, 19% in maintenance and rehabilitation projects and 20% in other projects and acquisitions.

Gas and Basic Petrochemicals



Pemex-Exploration and Production's average natural gas production decreased by 2.0%, from 4,511 million cubic feet per day in 2001 to 4,423 million
cubic feet per day in 2002, while the average natural gas processed by Pemex-Gas and Basic Petrochemicals increased by 2.2%, from 3,677 million cubic feet per day in 2001 to
3,758 million cubic feet per day in 2002. Natural gas production associated with crude oil production accounted for 70.5% of production of natural gas in 2002, 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, 49 fields (or 18% of the 275
producing fields) accounted for 85% of all production in 2002. Of the total production, 32.8% originated in the Marine region, 38.5% 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 2002, Pemex-Gas and Basic Petrochemicals
owned ten facilities.

The
following facilities are located in the Southern region:



The
following facilities are located in the Northern region:



36

---







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, 2002.

Natural Gas and Condensates Processing and Production(1)

|           |                                       | Year Ended December 31, |       |       |      
|---------- | ------------------------------------- | ----------------------- | ----- | ----- | -----
|
|
|
|Processing |                                       |                         |       |       |      
|           | Wet gas                               |                         | 3,568 |       | 3,527
|           |                                       | Sour gas(2)             |       | 3,177 |      
|           |                                       | Sweet gas(3)            |       | 391   |      
|           | Condensates(4)                        |                         | 98    |       | 96   
|           | Gas to natural gas liquids extraction |                         | 3,716 |       | 3,612
|           |                                       | Wet gas                 |       | 3,416 |      
|           |                                       | Reprocessing streams(5) |       | 300   |      
|Production |                                       |                         |       |       |      
|           | Dry gas(6)                            |                         | 2,816 |       | 2,709
|           | Natural gas liquids(7)(8)             |                         | 439   |       | 447  
|           | Liquefied petroleum gas(7)            |                         | 196   |       | 201  
|           | Ethane(7)                             |                         | 145   |       | 160  
|           | Naphtha(7)(9)                         |                         | 88    |       | 84   
|           | Sulphur(10)                           |                         | 739   |       | 687  

---

37

---

Processing Capacity

|                                        |                        | Year Ended December 31,
|--------------------------------------- | ---------------------- | -----------------------
|
|
|Sweetening plants                       |                        |                        
|                                        | Sour condensates(1)(2) |                        
|                                        | Sour natural gas(2)    |                        
|Natural gas liquids recovery plants     |                        |                        
|                                        | Cryogenics(3)          |                        
|                                        | Absorption(4)          |                        
|                                        |                        |                        
|                                        |                        | Total                  
|Natural gas liquids fractionating(1)(5) |                        | 554                    
|Processing of hydrosulphuric acid       |                        | 216                    

---

Domestic consumption of dry gas, which is natural gas with a methane content of more than 90%, totaled 4,295 million cubic feet per day in
2002, a 12% increase from the 2001 domestic consumption of 3,823 million cubic feet per day. The subsidiary entities consumed approximately 44% of the total domestic dry gas consumed in 2002,
while the industrial-distributor sector consumed 26% and the electrical sector consumed 30%.

We
import dry gas to satisfy shortfalls in our production and to meet demand in areas of northern Mexico which, due to their distance from the fields, can be supplied more efficiently by
importing natural gas from the United States. We imported 592 million cubic feet per day of dry gas in 2002, a 103% increase from the 292 million cubic feet per day imported in 2001.

Pemex-Gas
and Basic Petrochemicals also produces 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 6%, from 443 thousand
barrels per day in 2001 to 418 thousand barrels per day in 2002, due to repairs and improvements during 2002.

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. The volume of sour condensates we processed from Pemex-Exploration and Production and internal streams
of Pemex-Gas and Basic Petrochemicals amounted to 89 thousand barrels per day in 2002, a 12% decrease from 101 thousand barrels per day processed in 2001. Of these amounts,
75 thousand barrels per day (85%) resulted in stabilized condensates during 2002, and 87 thousand barrels per day (86%) resulted in stabilized condensates during 2001.

At
the end of 2002, we began the construction of two modular cryogenic plants at the Reynosa complex, that will each produce 200 million cubic feet of gas per day. Operations are
expected to begin in 2004.

We
finished the construction of three processing plants at the Arenque Complex during the first half of 2003 in order to better process the gas available in the Altamira district in
Tamaulipas. One processing plant is a sweetening sour natural gas plant that produces 34 million cubic feet per day, the second plant is a modular cryogenic plant that produces
33 million cubic feet of gas per day and the third plant is a sulphur recovery plant that produces 13 tons of sulphur per day.

38

---

The
Regulatory Law limits basic petrochemicals to the following nine products that are used in the petrochemical production process: ethane, propane, butane, pentanes, hexane, heptane,
carbon black, naphthas and methane, when obtained from hydrocarbon reservoirs in Mexico and used as raw material for petrochemical industrial processes.

These
nine products are produced by Pemex-Gas and Basic Petrochemicals. All other petrochemical products may be produced by Pemex-Petrochemicals or by private sector
companies. However, the Regulatory Law also allows 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 them to PEMEX.

Over
the five years ended December 31, 2002, 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.                     | 13,203.9 |       | Ps.  
|Liquefied petroleum gas |                   |                         | 16,389.9 |       |      
|Petrochemicals          |                   |                         |          |       |      
|                        | Hexane            |                         |          | 143.5 |      
|                        | Dissolving agents |                         |          |      |      
|                        | Sulphur           |                         |          | 142.9 |      
|                        | Carbon black      |                         |          | 90.5  |      
|                        | Pentanes          |                         |          | 22.0  |      
|                        | Heptane           |                         |          | 24.1  |      
|                        | Butane            |                         |          | 11.9  |      
|                        | Propane           |                         |          | 9.2   |      
|                        | Isobutane         |                         |          | 3.7   |      
|                        | Others            |                         |          | 9.6   |      
|                        |                   |                         |          |       |      
|                        |                   | Total Petrochemicals    |          |       | 457.4
|Total                   |                   | Ps.                     | 30,051.2 |       | Ps.  
|                        |                   |                         |          |       |      

---



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. de C.V |  | 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 |  | 99.87              |  
|Terrenos para Industrias, S.A.             |  | Real estate holding company                |  | 100.00             |  
|CH4 Energía, S.A. de C.V.                  |  | Trading of Gas                             |  | 50.00              |  

---

(1)    As of December 31, 2002. Source: Pemex-Gas and Basic Petrochemicals.

39

---



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 went into effect on
November 9, 1995.

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, theComisión Reguladora de Energía(Energy Regulatory Commission) approved the Gradual Access
Program for 1996-1997, which 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 to divest pursuant to the program, although a portion of these assets are still held in trust.



On February 27, 2003, President Fox issued an executive decree establishing maximum prices on first-hand and end-user sales of
liquefied natural gas as part of a Mexican Government program to stabilize LNG prices. The purpose of this program is to curtail seasonal price fluctuations that can adversely affect economic
development. Pursuant to the decree, the maximum prices of first hand sales will be adjusted periodically according to a formula determined by the Mexican Government, and the Ministry of the Economy
will fix the end-user's sale price. The decree will be in effect
until August 2003. Because the purpose of the program is to keep LNG costs constant over the course of the year, we expect that the net effect of this program on our year-end
results will be immaterial.



We are an importer of natural gas and have prepared our budget for 2003 based on a natural gas import price assumption of U.S. $3.12 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 these price fluctuations. As part of the Mexican Government's policy of promoting economic growth, on January 17, 2001, the Ministry of Finance and Public Credit, the Ministry of
Economy, the Ministry of Energy and PEMEX announced a natural gas pricing program 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.
This purchase price represents approximately a 58% discount on spot prices offered in the market as of January 17, 2001, a 13% premium over the average spot prices offered in the market during
the period from January 1, 2001 to December 31, 2002 and a 2.5% premium over the average spot prices offered in the market during the period from January 1, 2001 to May 31,
2003. 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. 1,863 million in 2002, as compared to Ps. 2,676 million in 2001, in projects primarily
related to natural gas and condensates processing, transportation and storage (excluding PIDIREGAS-related investments, which totaled Ps. 75 million in 2002). In 2003, the Mexican Government
approved Ps. 1,460 million of capital expenditures for investment in a new PIDIREGAS for Pemex-Gas and Basic

40

---

Petrochemicals
at the modular cryogenic plants in Reynosa. In addition to this, Ps. 2,941 million has been budgeted for Pemex-Gas and Basic Petrochemicals'
non-PIDIREGAS-related capital expenditures.

Petrochemicals



At the end of 2002, Pemex-Petrochemicals operated six petrochemical complexes and one petrochemical unit for the production of non-basic petrochemical
products. In addition, Pemex-Petrochemicals has one complex at Petroquímica Camargo that has not produced any petrochemicals since April 2002, and a petrochemical unit at Reynosa
that has not produced any petrochemicals since August 1999. At the end of 2002, Pemex-Petrochemicals operated 51 plants, including those that were not producing. Pemex-Petrochemicals had a
total installed capacity sufficient to produce 11.6 million tons of petrochemical products per year in 2002, 3.6% higher than its 2001 installed capacity of 11.2 million tons per year,
due to the increased production capacity of certain plants. Pemex-Petrochemicals' total production capacity for the last five years was distributed among its facilities as follows:

|                      |       | Pemex-Petrochemicals' Total Capacity Year ended December 31,
|--------------------- | ----- | ------------------------------------------------------------
|
|
|
|Cosoleacaque          |       | 4,817                                                       
|La Cangrejera         |       | 3,073                                                       
|Morelos               |       | 2,059                                                       
|Pajaritos             |       | 1,361                                                       
|Escolín               |       | 333                                                         
|San Martín Texmelucan |       | 387                                                         
|Others                |       | 402                                                         
|                      |       |                                                             
|                      | Total |                                                             
|                      |       |                                                             

---

Note:
Numbers may not total due to rounding.
(1)    Reflects the shutting down of two plants in our Reynosa unit in 2001. Source: Pemex BDI.



Pemex-Petrochemicals manufactures different non-basic petrochemical products, including:



Our
combined annual total petrochemical production (excluding ethane and butane gases) decreased by 4.9%, from 9,664 thousand tons in 2001 to 9,189 thousand tons in 2002.
Of this amount, Pemex-Petrochemicals produced 5,889 thousand tons of petrochemicals in 2002, representing a 1.75% decrease from its production of 5,994 thousand tons in 2001 due in part
to a reduction in the supply of raw materials such as natural gas and ethane and in part to decreased demand. The remainder was produced by Pemex-Gas and Basic Petrochemicals. For
information on Pemex-Gas and Basic Petrochemicals' petrochemical production, see "Gas and Basic Petrochemicals" above.

41

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Over the past five years, Pemex-Petrochemicals' petrochemical production has decreased due to adverse petrochemical market conditions in Mexico. The following table summarizes the annual
production associated with the principal petrochemical activities of Pemex-Petrochemicals for the five years ended December 31, 2002.

Pemex-Petrochemicals Production

|               |                           | Year Ended December 31, |       |       |      
|-------------- | ------------------------- | ----------------------- | ----- | ----- | -----
|
|
|
|Liquids        |                           |                         |       |       |      
|               | Pentanes                  |                         | 92    |       |     
|               | Hexanes                   |                         | 68    |       | 61   
|               | Heptanes                  |                         | 20    |       | 21   
|               |                           |                         |       |       |      
|               |                           | Total                   |       | 180   |      
|Other inputs   |                           |                         |       |       |      
|               | Oxygen                    |                         | 488   |       | 453  
|               | Nitrogen                  |                         | 108   |       | 112  
|               | Hydrogen                  |                         | 12    |       | 15   
|               |                           |                         |       |       |      
|               |                           | Total                   |       | 608   |      
|Petrochemicals |                           |                         |       |       |      
|               | Methane derivatives       |                         | 4,374 |       | 3,019
|               | Ethane derivatives        |                         | 2,945 |       | 2,696
|               | Aromatics and derivatives |                         | 1,402 |       | 1,235
|               | Propylene and derivatives |                         | 243   |       | 193  
|               |                           | Others                  |       | 56    |      
|               |                           |                         |       |       |      
|               |                           | Total                   |       | 9,020 |      
|Other products |                           |                         |       |       |      
|               | Hydrochloric acid         |                         | 116   |       | 105  
|               | Muriatic acid             |                         | 34    |       | 25   
|               |                           |                         |       |       |      
|               |                           | Total                   |       | 150   |      
|               |                           |                         |       |       |      
|               | Total                     |                         | 9,958 |       | 7,991
|               |                           |                         |       |       |      

---

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



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. 1,454 million in 2002, as compared to Ps. 1,058 million in 2001, in projects primarily related to natural gas and condensates processing, transportation
and storage. For 2003, Pemex-Petrochemicals expects to invest Ps. 2,465 million on these projects.



In 2001, the value of the domestic sales of petrochemical products by Pemex-Petrochemicals decreased by 11.0% from Ps. 7,948 million in 2001 to Ps.
7,074 million in 2002. This decrease was primarily due to a reduction in domestic demand for certain of the products manufactured by Pemex-Petrochemicals. The lower price of urea and the
decrease in the demand for ammonia resulted in a 11.0% decrease in sales revenue as compared to 2001. In 2002, Pemex-Petrochemicals experienced a 1.5% decrease in the sales volume of ethane
derivatives as compared to 2001, due to a contraction in demand for polyethylene. In addition, in 2002, our sales of propylene and its derivatives decreased by 10.3%, as compared to 2001. On the other
hand, as a result of the deregulation of the sale of toluene, Pemex-Petrochemicals experienced a 45.3% sales increase by volume of this product in 2002.

42

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Over
the five years ended December 31, 2002, 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.                     | 2,093 |       | Ps.
|Ethane derivatives        |       |                         | 5,309 |       |    
|Aromatics and derivatives |       |                         | 1,513 |       |    
|Propylene and derivatives |       |                         | 810   |       |    
|Others                    |       |                         | 19    |       |    
|                          |       |                         |       |       |    
|                          | Total |                         | Ps.   | 9,744 |    
|                          |       |                         |       |       |    

---

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



Pemex-Petrochemicals and Petróleos Mexicanos are the sole shareholders and own the following seven subsidiaries that 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:



On
August 28, 2002, the board of directors of Petróleos Mexicanos approved the merger of the seven subsidiaries of Pemex-Petrochemicals into Pemex-Petrochemicals.
The merger remains subject to the review of the Ministry of Energy of Mexico and the fulfillment of other legal requirements, and has not yet been completed.

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

43

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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 1,702 thousand barrels per day
of crude oil in 2002, which constituted 53.6% of our total crude oil production.

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) |                                    |                        
|                              | 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°) |                        
|                              |                                    |                        
|                              |                                    | 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.
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Source: |  | PMI operating statistics, which are based on information in bills of lading.                                                                                                                                                                                                                                                                                                                                                  

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

---

Source: PMI operating statistics, which are based on information in bills of lading.



In 2002, 96.9% of PMI's sales of our crude oil exports were to countries in the western hemisphere. As of December 31, 2002, PMI had 35 customers in 14
countries. Among these countries, the United States, Spain, the Netherlands Antilles, Canada and Japan have consistently been our largest customers.

44

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

Crude Oil Exports by Country

|                     |       | Percentage of Exports |      
|-------------------- | ----- | --------------------- | -----
|
|United States        |       | 77.0                  | %    
|Spain                |       | 7.7                   |      
|Netherlands Antilles |       | 5.0                   |      
|Japan                |       | 1.8                   |      
|Canada               |       | 1.9                   |      
|Others               |       | 6.6                   |      
|                     |       |                       |      
|                     | Total |                       | 100.0
|                     |       |                       |      

---

Note:
Numbers may not total due to rounding. Source: PMI operating statistics, which are based on information in bills of lading.

45

---

The following table sets forth the geographic distribution of PMI's sales of crude oil exports from January 1, 1998 through
December 31, 2002. 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              |       | 1,347          
|Europe                                |       | 190            
|Central and South America             |       | 130            
|Far East                              |       | 32             
|Africa                                |       | 13             
|                                      |       |                
|Total                                 |       | 1,712          
|                                      |       |                
|Olmeca (API gravity of 38°-39°)       |       |                
|United States and Canada              |       | 452            
|Others                                |       | 5              
|                                      |       |                
|                                      | Total |                
|                                      |       |                
|Isthmus (API gravity of 32°-33°)      |       |                
|United States and Canada              |       | 82             
|Others                                |       | 114            
|                                      |       |                
|                                      | Total |                
|                                      |       |                
|Maya (API gravity of 21°-22°)         |       |                
|United States and Canada              |       | 807            
|Others                                |       | 246            
|                                      |       |                
|                                      | Total |                
|                                      |       |                
|Altamira (API gravity of 15.0°-16.5°) |       |                
|United States and Canada              |       | 6              
|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.
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Source: |  | PMI operating statistics, which are based on information in bills of lading.                                                                                                                                                                                                                                                                                                                                                  

PMI makes a significant percentage of its 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 (at the shipping
point). In practically all cases, PMI sells refined products onFree on BoardandCost and Freightbases
and buys refined products onDelivery Ex-shiporDelivery at Frontierand Cost 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 provides the purchasers with certain support mechanisms that will protect, under certain adverse market
conditions, the investments that the purchasers undertake in accordance with the agreements. These agreements include:

46

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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 or increase exports of crude oil as discussed below in "Trade Regulations and Export Agreements."

47

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The following table sets forth the average volume of our exports and imports of crude oil, natural gas and petroleum products for the five years ended December 31, 2002.

Volume of Exports and Imports

|        |                           | Year Ended December 31, |                 |         |        
|------- | ------------------------- | ----------------------- | --------------- | ------- | -------
|
|
|
|Exports |                           |                         |                 |         |        
|        | Crude Oil                 |                         |                 |         |        
|        |                           | Olmeca                  |                 | 457.1   |        
|        |                           | Isthmus                 |                 | 195.9   |        
|        |                           | Maya(1)                 |                 | 1,058.7 |        
|        |                           |                         |                 |         |        
|        |                           |                         | Total crude oil |         | 1,711.7
|        | Natural gas(2)            |                         | 5.9             |         | 20.4   
|        | Refined products          |                         | 120.0           |         | 149.7  
|        | Petrochemical products(3) |                         | 1,025.4         |         | 785.0  
|Imports |                           |                         |                 |         |        
|        | Natural gas(2)            |                         | 22.6            |         | 22.0   
|        | Refined products          |                         | 335.2           |         | 365.3  
|        | Petrochemical products(3) |                         | 130.8           |         | 214.9  

---

Natural gas imports increased by 102.8% in 2002, from 292.2 million cubic feet per day in 2001 to 592.5 million cubic feet per day
in 2002, primarily due to the increasing demand for natural gas in Mexico, which outpaced the increases in domestic supply. In 2002, total exports and imports of petrochemical products by volume
increased by 2.0%, from 1,074.3 thousand metric tons in 2001 to 1,095.8 thousand metric tons in 2002. In 2002, total exports and imports of refined products by volume increased by 4.4%,
from 484.6 thousand barrels per day in 2001 to 505.8 thousand barrels per day in 2002.

48

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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, 2002.

Value of Exports and Imports(1)

|            |                        | Year ended December 31, |                    |         |        
|----------- | ---------------------- | ----------------------- | ------------------ | ------- | -------
|
|
|
|Exports     |                        |                         |                    |         |        
|            |                        | Olmeca                  |                    | $       | 2,194.4
|            |                        | Isthmus                 |                    |         | 848.9  
|            |                        | Maya(2)                 |                    |         | 3,306.7
|            |                        |                         |                    |         |        
|            |                        |                         | Total crude oil(3) |         | $      
|            | Natural gas            |                         |                    | 30.9    |        
|            | Refined products       |                         |                    | 560.7   |        
|            | Petrochemical products |                         |                    | 143.3   |        
|            |                        |                         |                    |         |        
|            |                        |                         | Total products     |         | $      
|            |                        | Total exports           |                    | $       | 7,084.9
|            |                        |                         |                    |         |        
|Imports     |                        |                         |                    |         |        
|            | Natural gas            |                         | $                  | 121.7   |        
|            | Refined products       |                         |                    | 2,109.3 |        
|            | Petrochemical products |                         |                    | 33.8    |        
|            |                        |                         |                    |         |        
|            |                        | Total imports           |                    | $       | 2,264.8
|            |                        |                         |                    |         |        
|Net exports |                        | $                       | 4,820.1            |         | $      
|            |                        |                         |                    |         |        

---

In 2002, Pemex continued to be a net importer of refined products, although imports of refined products decreased in value by 7.5%, and exports of
refined products increased in value by 43.7%. Pemex's net imports of refined products for 2002 totaled U.S. $2,538.9 million, a 21.7% reduction in the refined products trade deficit of U.S.
$3,242.7 million in 2001. During 2003, import volumes of refined products are likely to continue to fluctuate significantly as a result of the anticipated startup of new refining plants.

Imports
of natural gas increased in value by 83% during 2002, while exports of natural gas decreased by 91.6%, primarily because of an increase in domestic demand for natural gas
resulting from increased activity in the Mexican electrical and industrial sectors and by natural gas distributors.

49

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The
following table describes the composition of our imports and exports of selected refined products in 2000, 2001 and 2002.

Imports and Exports of Selected Refined Products

|                        |       | Year Ended December 31, |      
|----------------------- | ----- | ----------------------- | -----
|
|
|Imports                 |       |                         |      
|Gasoline(1)             |       | 153.6                   |      
|Fuel oil                |       | 117.5                   |      
|Liquefied petroleum gas |       | 118.1                   |      
|Diesel                  |       | 42.0                    |      
|Others                  |       | 14.3                    |      
|                        |       |                         |      
|                        | Total |                         | 445.5
|                        |       |                         |      
|Exports                 |       |                         |      
|Gasoline(1)             |       | 69.6                    |      
|Diesel                  |       | 3.1                     |      
|Liquefied petroleum gas |       | 5.6                     |      
|Jet fuel                |       | 3.6                     |      
|Fuel oil                |       | 0.1                     |      
|Others                  |       | 30.5                    |      
|                        |       |                         |      
|                        | Total |                         | 112.5
|                        |       |                         |      

---

For the three years ended December 31, 2002, our imports and exports of selected petrochemicals were as follows:

Imports and Exports of Selected Petrochemicals

|              |       | Year Ended December 31, |        
|------------- | ----- | ----------------------- | -------
|
|
|Imports       |       |                         |        
|Xylenes       |       |                        |        
|Propylene     |       | 3.2                     |        
|Ammonia       |       | 231.7                   |        
|Others        |       | 209.6                   |        
|              |       |                         |        
|              | Total |                         | 444.5  
|              |       |                         |        
|Exports       |       |                         |        
|Sulphur       |       | 517.1                   |        
|Ammonia       |       | 248.0                   |        
|Ethylene      |       | 164.3                   |        
|Polyethylenes |       | 35.0                    |        
|Others        |       | 159.4                   |        
|              |       |                         |        
|              | Total |                         | 1,123.8
|              |       |                         |        

---

50

---



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. See "Item 11Quantitative and Qualitative Disclosure About Market Risk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 2002, our pipeline network measured approximately 54,600 kilometers in length. Of the total network, approximately 8,905 kilometers of pipelines transport crude
oil, approximately 8,041 kilometers transport petroleum products and petrochemicals, 9,511 kilometers transport natural gas, 1,822 kilometers transport liquefied petroleum gas, 867 kilometers
transport basic petrochemicals and the remaining pipelines 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
2002, we transported approximately 73.7 billion tons per kilometer of crude oil and petroleum products to be processed in the refining system and petroleum products to
satisfy domestic demand, as compared to the 72.9 billion tons per kilometer carried in 2001. Of the total amount of tons per kilometer we transported in 2002, we carried 62% through pipelines,
35% by vessels and the remainder by train tank cars and tank trucks.

At
the end of 2002, we owned nineteen refined product tankers and leased another eight. 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 civil liability insurance

51

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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 protection and indemnity insurance, life insurance, as well as insurance for automobiles and heavy equipment, electronic equipment and cargo and
hull insurance for our shipping fleet.

We
contract all of our insurance policies through Mexican insurance carriers. These policies have limits of U.S. $1.25 billion for onshore property, U.S. $1.5 billion for
offshore property, U.S. $300 million for extraordinary costs related to the operation of offshore wells, U.S. $500 million for protection and indemnity for marine-related liabilities 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.

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 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. TheSecretaría
de la Función Pública(which we refer to as "SFP"), formerly known as SECODAM, appoints the external auditors of Petróleos
Mexicanos and the subsidiary entities.

TheAuditoría Superior de la Federación(the Supreme Auditor of the Federation and an entity of the Mexican
Congress, which we refer to as the "ASF"), reviews theCuenta Pública(public account) of the various federal government entities on an
annual basis, including Petróleos Mexicanos and the subsidiary entities. This review focuses mainly on the entities' compliance with budgetary benchmarks and budget and accounting laws.
The ASF prepares reports of its observations based on this review. The reports are subject to our analysis and, if necessary, our clarification and explanation of any issues raised during the audit.
Discrepancies in amounts spent may subject PEMEX officials to legal sanctions. However, in most instances the observed issues are explained and clarified. The financial information provided to the ASF
is prepared in accordance with Mexican Financial Reporting Standards applicable to Mexican public sector entities, which differ in several aspects from Mexican GAAP. As a result, our financial
statements reflect different financial data than that included in the public account.

52

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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 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 as necessary, 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 of the 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, internal environmental audits and inspections 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 and inspections are recorded in our financial statements when they are known and estimable.

53

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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 theProcuraduría Federal de Protección al Ambiente(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
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, 2002, with respect to Petróleos Mexicanos and the subsidiary
entities, 450 environmental audits had been completed under the program with PROFEPA and all main facilities had been covered. 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, 2002, corrective action plans for 308 audits had been
completed and 243 sites had received "clean industry" certifications from PROFEPA (some of which had to be recertified). With respect to the remaining 142 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, 2002, our estimated and accrued environmental liabilities totaled Ps. 2,200 million. Of this total, Ps. 1,263 million was
attributable to Pemex-Exploration and Production, Ps. 774 million was attributable to Pemex-Refining, Ps. 140 million was attributable to Pemex-Gas and Basic Petrochemicals
and Ps. 23 million 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, 2002.

54

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Pemex-Exploration and Production

|                        |  | Estimated Affected Area |  | Estimated Liability
|----------------------- |  | ----------------------- |  | -------------------
|
|Northern Region         |  | 312.85                  |  | Ps.                
|Southern Region         |  | 18.64                   |  |                    
|Southeast Marine Region |  | 3.00                    |  |                    
|                        |  |                         |  |                    
|Total(1)                |  | 334.49                  |  | Ps.                
|                        |  |                         |  |                    

---

Containment Reservoir DrainageNumber of
Reservoirs

Estimated Liability(in thousands of pesos)Northern Region(1)

770

Ps.
383,619Southern Region

37


119,914Southeast Marine Region




Total(2)

807

Ps.
503,533Total estimated environmental liabilities of Pemex-Exploration and Production



Ps.
1,263,335


---

Pemex-Refining

Estimated affected area

Estimated Liability(in hectares)

(in thousands of pesos)Pipelines(1)

8.11

Ps.
64,353Refineries(2)

985.25


225,474Storage and Distribution Terminals(3)(4)

212.69


296,430Other affected areas(5)

63.00


187,679Total

1,269.05

Ps.
773,936


---

55

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Pemex-Gas and Basic Petrochemicals

Estimated affected area

Estimated Liability(in hectares)

(in thousands of pesos)Complex Gas Processors(1)

52.67

Ps.
138,656Pipelines(2)

0.11


1,282Total

52.78

Ps.
139,938


---

Pemex-Petrochemicals

Estimated affected area

Estimated Liability(in hectares)

(in thousands of pesos)Petroquímica Cangrejera, S.A. de C.V.

0.30

Ps.
1,343Petroquímica Pajaritos, S.A. de C.V.

10.13


21,203Total(1)

10.43

Ps.
22,546


---

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 up 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 the remediation cost may not
be known with certainty, these accruals are made when the liability is probable and the amount is reasonably estimable, in accordance with Bulletin C-12 "Contingencies and Commitments" for
Mexican GAAP purposes and with SFAS No. 5 "Accounting for Contingencies" for U.S. GAAP purposes. These estimated liabilities include assumptions resulting from an 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 a further discussion of PEMEX's environmental liabilities, see Note 19 II d) 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 2002, we were not aware of uncertainties with respect to joint and several liabilities 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 of any claims and are therefore directly and immediately accountable for any 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 2002, we invested approximately Ps. 3,057 million in environmental projects as compared to Ps. 2,787 million in 2001. For 2003, we have budgeted
Ps. 3,608 million for environmental expenditures. The most important of these projects are directed to the modernization of installations, the implementation of systems and control

56

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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 conduct 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 ("NAFTA") among the governments of
Mexico, the United States and Canada 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 three agreements in 1998 and 1999, Mexico agreed to reduce our oil exports by 325 thousand barrels per day through most of 1999. These agreements
were successful in stabilizing oil prices in 1999.

During
2000, the Ministry of Energy of Mexico announced increases in crude oil exports by a total of 225 thousand barrels per day, in line with OPEC agreements to increase crude
oil production that year. By contrast, in 2001, the Ministry of Energy announced reductions in crude oil export levels totaling 185 thousand barrels per day. Mexico agreed with other oil
producing countries to reduce its oil exports in conjunction with production cuts by other oil producing countries in order to stabilize oil prices, which fell sharply in December 2000.

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 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. In January 2003, as a result
of increasing market demand, Mexico agreed to increase its crude oil exports by 100 thousand barrels per day to a level of 1.76 million barrels per day. In February 2003, in light
of the loss of more than 2 million barrels per day of Venezuelan crude oil, Mexico announced an additional 120 thousand barrel per day increase in its crude oil export to a level of
1.88 million barrels per day.

For
more information on these agreements and announcements, see "Item 5Operating and Financial Review and ProspectsSales Volumes and PricesExport
Agreements."

NAFTA
did not affect the exclusive rights of Mexico, through PEMEX, to explore and produce crude oil and natural gas in Mexico, and to refine crude oil and to produce basic
petrochemicals in Mexico. 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 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 rates at which the Mexican Congress assesses hydrocarbon taxes and duties may vary from year to year and are set

57

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after
taking into consideration our operating budget, our capital expenditure program and our financing needs. The aggregate tax rate for all special hydrocarbon taxes and duties will not exceed 60.8%
of the revenues of sales to third parties under the oil price set for the particular year.

If
the indirect IEPS Tax that we collect is taken into account, we contributed approximately 30% of the Mexican Government's revenues in 2002 and 34% in 2001.

The
most important taxes and duties that we are required to pay and their applicable rates in 2003 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 its 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, and may be determined on a consolidated basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|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.

We
make advance payments to the Mexican Government in respect of our Hydrocarbon Extraction Duties and IEPS Tax. These are credited against our liability under the foregoing duties and
taxes. 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 2003, the Hydrocarbon Duty is calculated by applying a rate of 60.8% to the sales

58

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revenues
of Petróleos Mexicanos and subsidiary entities from the PMI Group and third parties, including the IEPS Tax generated by Pemex-Refining, but excluding the value added 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

The Excess Gains Revenue Duty is a 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 2002, we paid an Excess Gains Revenue Duty because our crude oil export prices exceeded the U.S.
$15.50 per barrel threshold established for that year.For 2003, the Excess Gains Revenue Duty is 39.2% of those revenues from crude oil export sales in
excess of a threshold crude oil price of U.S. $18.35 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
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 both 2001 and 2002 and expect to pay this duty again in 2003. We cannot assure you that the Mexican Government will not lower this threshold price again 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, some of our subsidiary companies are Mexican corporations and are
subject to the tax regime applicable to all 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 debts 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. 684 million in 2001 and Ps. 430 million in 2002.

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 the current 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 that allow the Mexican Government

59

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to
recover income from hydrocarbon extraction while improving PEMEX's ability to finance more efficiently the development of hydrocarbon reserves and investments in property, plant and equipment.

Nevertheless,
the Mexican Government has not yet 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 hydrocarbon tax laws applicable to us.

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 is the chief of the executive branch of the Mexican Government. The current President of Mexico 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 reelection for any additional terms.

In
the Congressional election held on July 2, 2000, all of the seats in the Senate and 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 as of November, 2002:

Party Representation in Congress

Senate

Chamber of DeputiesSeats

% of Total

Seats

% of TotalInstitutional Revolutionary Party

60

46.9
%
208

41.6
%National Action Party

46

35.9

205

41.0Democratic Revolution Party

16

12.5

54

10.8Ecological Green Party of Mexico

5

3.9

17

3.4Labor Party

0

0.0

8

1.6Nationalist Social Party

0

0.0

3

0.6Social Alliance Party

0

0.0

2

0.4Convergence for Democracy

1

0.8

3

0.6Total

128

100.0
%
500

100.0
%


---

The Economy



On June 11, 2002, the Mexican Government announced thePrograma Nacional de Financiamiento del Desarrollo
2002-2006(National Development Financing Program 2002-2006, or "PRONAFIDE 2002-2006"). The goals of the PRONAFIDE 2002-2006 are
to:



60

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The
basic strategies that the Mexican Government expects to employ in connection with the PRONAFIDE 2002-2006 are as follows:



Notwithstanding
these initiatives, significant new investment in infrastructure, industrial and agricultural modernization, training and environmental protection will be required for
continued growth and development. The Mexican economy is also likely to continue to be subject to the effects of adverse domestic and external factors such as declines in foreign direct and portfolio
investment, high interest rates and low oil prices, which may lead to volatility in the foreign exchange and financial markets and may affect Mexico's ability to service its foreign debt.

The
PRONAFIDE 2002-2006 presents the medium-term strategy aimed at creating and strengthening domestic sources of financing within a stable macroeconomic
environment and contemplates a medium-term fiscal stance that includes the following:



On May 24, 2002, the Mexican Government completed its privatization of Aseguradora Hidalgo, S.A. ("AHISA"). The Comisión Intersecretarial de
Desincorporación ("CID") approved the sale of AHISA shares owned by the Mexican Government and by PEMEX to MetLife Inc. for Ps. 9,200 million.

On
June 19, 2002, the Mexican Government and the Bank Savings Insurance Institute ("IPAB"), jointly carried out the sale of nearly all of their shares of Grupo Financiero BBVA
Bancomer, S.A. de C.V. ("BBVA Bancomer") in the national and international markets. On July 3, 2002, the Mexican Government and IPAB sold additional shares pursuant to an
over-allotment option. The Mexican Government had retained a minority interest in Bancomer, S.A. at the time of its privatization in 1991. IPAB had acquired the shares in connection with
the purchase by BBVA Bancomer of Banca Promex, S.A. in 2000. The net proceeds to the Mexican Government as a result of the sale totaled Ps. 6.5 billion for the shares sold internationally, Ps.
574.2 million for the shares sold in Mexico and U.S. $11.2 million for the shares sold in the United States in the form of ADSs. The proceeds to IPAB as a result of the sale totaled Ps.
1,004.6 million for the shares sold internationally, Ps. 88.1 million for the shares sold in Mexico and U.S. $1.7 million for the ADSs sold in the United States. From
November 2002 through January 2003, the Mexican Government and IPAB sold their remaining shares of BBVA Bancomer in the Mexican stock market for total net proceeds of Ps.
444.4 million for the Mexican Government and Ps. 68.2 million for IPAB.

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On December 12, 2002, Congress approved the dissolution and liquidation of Banco Nacional de Crédito Rural, S.N.C., a governmental development bank, as discussed
under "Public Finance2002 Budget and Fiscal Results."



During 2001, Gross Domestic Product ("GDP") decreased by 0.3% in real terms, as compared to 2000. GDP grew by 1.8% in real terms in the first quarter of 2001,
remained relatively constant in the second quarter, decreased by 1.5% in the third quarter and decreased by 1.5% in the fourth quarter, each as compared to the same period of 2000.

According
to preliminary figures, GDP increased by 0.9% in real terms during 2002. The financial services, insurance and real estate sector grew by 4.4%, the electricity, gas and water
sector grew by 3.8%, and the transportation, storage and communications sector grew by 2.2%, each in real terms. The construction sector grew by 1.7% and the community, social and personal services
sector grew by 1.3%, each in real terms. The mining, petroleum and gas sector decreased by 0.3%, the agriculture, livestock, fishing and forestry sector and the commerce, hotel and restaurant sector
each decreased by 0.4%, and the manufacturing sector decreased by 0.6%, each in real terms.

According
to preliminary figures, GDP grew by 2.3% in real terms during the first quarter of 2003, as compared with the same period of 2002. The construction sector grew by 5.9%, the
transportation, storage and communications sector grew by 4.3%, the financial services, insurance and real estate sector grew by 4.1%, and the electricity, gas and water sector grew by 3.0%, each in
real terms. The community, social and personal services sector grew by 2.1%, the commerce, hotels and restaurant sector grew by 1.6%, the mining, petroleum and gas sector grew by 1.3% and the
manufacturing sector grew by 0.9%, each in real terms. The agriculture, livestock, fishing and forestry sector decreased by 0.2% 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

|                                              |  | 1998 |   | 1999 |   | 2000 |   | 2001 |    | 2002(1) |   | First
quarter of
2003(1)(2) |  
|--------------------------------------------- |  | ---- | - | ---- | - | ---- | - | ---- | -- | ------- | - | --------------------------- | -
|GDP (constant 1993 prices)                    |  | 4.9  | % | 3.7  | % | 6.6  | % | (0.3 | )% | 0.9     | % | 2.3                         | %
|Agriculture, livestock, fishing and forestry  |  | 0.8  |   | 3.6  |   | 0.6  |   | 3.3  |    | (0.4    | ) | (0.2                        | )
|Mining, petroleum and gas                     |  | 2.7  |   | (2.1 | ) | 3.8  |   | (0.8 | )  | (0.3    | ) | 1.3                         |  
|Manufacturing                                 |  | 7.3  |   | 4.2  |   | 6.9  |   | (3.7 | )  | (0.6    | ) | 0.9                         |  
|Construction                                  |  | 4.2  |   | 5.0  |   | 5.1  |   | (5.3 | )  | 1.7     |   | 5.9                         |  
|Electricity, gas and water                    |  | 1.9  |   | 7.9  |   | 1.0  |   | 1.3  |    | 3.8     |   | 3.0                         |  
|Transportation, storage and communications    |  | 6.7  |   | 7.8  |   | 9.6  |   | 3.8  |    | 2.2     |   | 4.3                         |  
|Commerce, hotels and restaurants              |  | 5.6  |   | 3.1  |   | 12.4 |   | (1.9 | )  | (0.4    | ) | 1.6                         |  
|Financial services, insurance and real estate |  | 4.6  |   | 3.6  |   | 5.2  |   | 4.6  |    | 4.4     |   | 4.1                         |  
|Community, social and personal services       |  | 2.9  |   | 2.1  |   | 2.9  |   | (0.3 | )  | 1.3     |   | 2.1                         |  

---



During most of 2000, the annual inflation rate (as measured by the change in the national consumer price index, or "NCPI") maintained an uninterrupted downward
trend in accordance with the goals established by
Banco de México, Mexico's central bank, and fell to 9.0% for the year. However, during the last few months of 2000, the

62

---

economy
experienced inflationary pressures, which led Banco de México to adopt a stricter monetary stance. Inflation during 2001 was 4.4%, 2.1 percentage points lower than the
official inflation target for the year. Inflation during 2002 was 5.7%, 1.3 percentage points higher than the official inflation target for the year. The increase in inflation in 2002 was
attributable to several factors, including increases in residential electricity prices, domestic gas prices and fruit and vegetable prices. Inflation during the first five months of 2003 was 1.16%,
0.97 percentage points lower than during the same period of 2002.



The 28-day Treasury bill (Certificados de la Tesorería de la Federación,or "Cetes") rate reached 18.1%, 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,
interest rates registered a slight decline toward the end of 2000. For 2000 as a whole, the 28-dayCetesrate averaged 15.2%,
6.2 percentage points lower than the average rate during 1999, and the 91-dayCetesrate averaged 16.2%, 6.2 percentage points
lower than the average rate during 1999.

During
2001, interest rates on 28-dayCetesaveraged 11.3% and interest rates on 91-day Cetesaveraged 12.2%, as compared with average rates on 28-dayCetesand 91-day Cetesof 15.2% and 16.2%, respectively, during 2000.

During
2002, interest rates on 28-dayCetesaveraged 7.1% and interest rates on 91-day Cetesaveraged 7.4%, as compared with average rates on 28-dayCetesand 91-day Cetesof 11.3% and 12.2%, respectively, during 2001. Interest rates rose during the first quarter of 2002 due to anticipation that inflation would
result from the partial elimination of subsidies on electricity prices. Interest rates subsequently declined in 2002 following monetary policy interventions that reduced the risk of inflationary
pressures.

During
the first five months of 2003, interest rates on 28-dayCetesaveraged 7.9% and interest rates on 91-day Cetesaveraged 8.1%, as compared with average
rates on 28-dayCetesand 91-day Cetesof 6.9% and 7.1%, respectively, during the same period of 2002. On June 17, 2003, the 28-day Cetesrate was 5.3% and the 91-dayCetesrate was 5.4%.

Financial System



Mexico's monetary program for 2002 had as its principal objective the achievement of an inflation rate not exceeding 4.5% by the end of 2002. The following
elements were considered necessary conditions to meet the inflation target for 2002 and to be in a better position to achieve the targeted inflation rate of approximately 3.0% for 2003:



63

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Banco
de México has continued to use the "short" mechanism to induce the necessary changes in interest rates to achieve inflation objectives. Under the mechanism, the
daily average of the net total balance of the current accounts of banks accumulated during a certain period is a negative number, exerting an upward influence on interest rates. This mechanism allows
Banco de México to combat disorderly conditions in the money and foreign exchange markets and to help ensure that changes in the monetary base follow a path
consistent with the assumed inflation rate. The Board of Governors of Banco de México decided to increase the "short" to Ps. 360 million on February 8, 2002 in order to
avoid a deterioration of inflationary expectations and a negative effect on price levels in general. In response to the decline in interest rates and inflationary expectations, the Board of Governors
of Banco de México decreased the "short" from Ps. 360 million to Ps. 300 million on April 12, 2002. However, it increased the "short" from Ps. 300 million to
Ps. 400 million on September 23, 2002, and from Ps. 400 million to Ps. 475 million on December 6, 2002 in order to lower inflationary expectations for 2003.

At
December 31, 2002, the monetary base had grown to Ps. 263,937 million, a 10.7% increase in real terms as compared to the level of Ps. 225,580 million at
December 31, 2001. The net domestic credit of Banco de México registered a negative balance of Ps. 265,566 million at December 31, 2002, as compared to a negative
balance of Ps. 185,735 million at December 31, 2001. The increase in the negative balance was attributable primarily to the accumulation of net international assets by Banco de
México during this period, inasmuch as the monetary base remained within the limits established in the monetary program.

During
2002, the M1a money supply increased by 6.5% in real terms, as compared with the 15.4% real growth observed in 2001.

The
growth in financial savings, defined as the difference between the monetary aggregate M4a and bills and coins held by the public, increased by 11.3% in real terms in 2001 and
increased by 4.8% in real terms in 2002. Savings generated by Mexican residents increased by 5.2% in real terms, whereas savings generated by non-residents decreased by 17.1% in real terms
in 2002.



Mexico's monetary program for 2003 has as its principal objective the achievement of an inflation rate not exceeding 3.0% by the end of 2003. Mexico's monetary
program for 2003 is made up of the following elements:



Banco
de México has increased the "short" on three occasions during 2003, from Ps. 475 million to Ps. 550 million on January 10, 2003, from Ps.
550 million to Ps. 625 million on February 7, 2003, and from Ps. 625 million to Ps. 700 million on March 28, 2003. These increases in the "short" were made in
response to internal and external factors that could have threatened the achievement of the inflation target for 2003.

At
June 13, 2003, the monetary base totaled Ps. 247,576 million, a 6.2% nominal decrease as compared to the level of Ps. 263,937 million at December 31, 2002.
Banco de México estimates that the monetary base will total approximately Ps. 300,900 million at December 31, 2003.

During
the first four months of 2003, the M1a money supply increased by 11.1% in real terms, as compared with the same period of 2002. In addition, checking account deposits denominated
in pesos increased by 11.1% in real terms during the first four months of 2003, as compared with the same period of 2002.

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During
the first four months of 2003, financial savings increased by 9.0% in real terms, as compared with the same period of 2002. Savings generated by Mexican residents increased by
8.9% in real terms, whereas savings generated by non-residents increased by 11.5% in real terms during the first four months of 2003, each as compared with the same period of 2002.



In connection with the implementation of NAFTA, amendments to several laws relating to financial services, including the Banking Law and the Ley 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 that implemented these amendments, as well as provisions of NAFTA 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 NAFTA 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
Banking Law was amended on June 4, 2001 to:



The 1994-95 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

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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, ("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. GAAP.

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 system, 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. For June 20, 2003, one UDI was set at Ps. 3.269739.

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The
Congress allocates funds to IPAB on an annual basis to manage and service IPAB's net liabilities, but those liabilities 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 March 31, 2003, IPAB's debt totaled Ps. 825.3 billion.

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. 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). IPAB is using 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.



The
Ministry of Finance and Public Credit issued new rules governing the capitalization requirements of Mexican commercial banks effective on 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 ten 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.

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 issued new rules 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, the Mexican Government announced new rules for classifying the credit portfolios of development banks as well
as new capitalization requirements for development banks.

At
December 31, 2002, calculated in accordance with the accounting criteria applicable to credit institutions since the beginning of 1998, the total amount of past-due
loans of commercial banks (excluding banks under Mexican Government intervention and those in special situations) was Ps. 44,952 million, as compared with Ps. 47,150 million at
December 31, 2001. On the other hand, the total loan portfolio of the banking system increased by 2.4% in real terms during the last quarter of 2002. As a consequence, the past-due
loans ratio of commercial banks was 4.6% at December 31, 2002, as compared with 5.1% at December 31, 2001. Loan loss reserves created by commercial banks (excluding banks under Mexican
Government intervention and those in special situations) totaled Ps. 62,074 million at
December 31, 2002, as compared with Ps. 58,376.5 million at December 31, 2001. At this level, commercial banks

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had
reserves covering 138% of their past-due loans, exceeding the minimum reserve level of 45% required by the applicable accounting criteria.

At
the end of March 2003, and as reported in accordance with the accounting criteria applicable to credit institutions since the beginning of 1998, the total amount of
past-due loans of commercial banks (excluding banks under Mexican Government intervention and those in special situations) was Ps. 45,188 million, as compared with Ps.
44,952 million at December 31, 2002. The total loan portfolio of the banking system decreased by 2.0% in real terms during the first quarter of 2003. The past-due loan ratio
of commercial banks was 4.6% at March 31, 2003, the same as the 4.6% past-due loan ratio at December 31, 2002. The amount of loan loss reserves created by commercial banks
(excluding banks under Mexican Government intervention and those in special situations) totaled Ps. 60,703 million at the end of March 2003, as compared with Ps. 58,377 million at
December 31, 2001. At this level, commercial banks have reserves covering 134% of their past-due loans, exceeding the minimum reserve level of 45% required by the applicable
accounting criteria.

On
June 1, 2001, the Organic Law of theBanco Nacional del Ahorro y Servicios Financieros(National Saving and Financial Services
Bank) became effective. This law seeks to improve and strengthen the institutional framework for popular savings and to incorporate more people into the formal financial system by creating a National
Savings and Financial Services Bank. The purpose of the law is to:



On
June 4, 2001, the Mutual and Investment Funds Law went into effect. The 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:





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.

Effective
June 1, 2001, the Securities Market Law was amended 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 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.

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The
market capitalization of the Mexican Stock Exchange was U.S. $104.7 billion at the end of 2002, representing a 17.3% decrease in dollar terms from its year-end
2001 level. The value of transactions on the Mexican Stock Exchange reached U.S. $37.9 billion in 2002, 47.8% less than in 2001. Fixed income securities
(i.e., commercial paper, notes, bonds and ordinary participation certificates) accounted for 2.2% and equity securities
(i.e., shares and certificates of patrimonial contribution) accounted for the remaining 97.8% of transactions in 2002.

At
December 31, 2002, the Stock Market Index stood at 6,127.09 points, representing a 3.8% decrease in nominal peso terms and a 9.0% decrease in real peso terms from the level at
December 31, 2001. At May 30, 2003, the Stock Market Index stood at 6,699.18 points, representing a 9.3% increase in nominal terms and an 8.1% increase in real terms from the level at
December 31, 2002. On June 20, 2003, the Stock Market Index stood at 7,080.69 points.



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 was intended to result in greater legal certainty and swifter case resolution for debtors and creditors involved in the insolvency process. The law replaced one that
had been in place since 1943. Among its provisions, the law limited 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 law also established 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.

On
April 30, 2000, the Mexican Congress passed into law the Miscellany of Secured Lending, which amended the Commerce Code, the General Law of Negotiable Instruments and Credit
Transactions and the Credit Institutions Law. The law was 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 recognized 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 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 law also provided for an expedited procedure for creditors to execute judgments against security interests.

On
June 13, 2003 the Executive published a decree of the Mexican Congress which amends the General Law of Negotiable Instruments and Credit Transactions, the Commerce Code, the
Securities Market Law, the Banking Law, the Insurance Companies Law, the Bond Companies Law and the General Law of Ancillary Credit Organizations and Activities. Among its provisions, the decree
eliminates a prior non-recourse provision applicable to the two types of security interests described in the paragraph above in order to allow creditors further recourse against debtors in
the event that proceeds derived from the sale or foreclosure of collateral are insufficient to pay secured obligations. The decree also amends certain aspects of the collateral trust, including
extending the period for which a trust may be created and changing certain aspects of the trustee's role. Provisions of the Commerce Code governing judicial foreclosure proceedings of securities
trusts are amended accordingly. Additionally, the new decree amends the Securities Market Law to redefine the provisions for creating and transferring the securities granted as collateral under a
special pledge over securities deposited in an institution for deposit and clearance of securities.

External Sector of the Economy



In 2002, Mexico registered a trade deficit of U.S. $7,916.2 million, as compared with a trade deficit of U.S. $9,953.6 million for 2001. Merchandise
exports increased by 1.5% in 2002, to U.S.$160,762.7 million, as compared with U.S. $158,442.9 million in 2001. In 2002, petroleum exports increased by 13.1% and
non-petroleum exports increased by 0.4%, in each case as compared with 2001. Exports of manufactured goods, which represented 88.3% of total merchandise exports, increased by 0.5% in 2002,
as compared with 2001.

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Total imports were U.S. $168,678.9 million in 2002, a 0.2% increase as compared with 2001. Imports of intermediate goods increased by 0.3%, imports of capital goods decreased by
6.7% and imports of consumer goods increased by 7.2% in 2002, each as compared with 2001.

During
the first four months of 2003, Mexico registered a trade deficit of U.S. $1,100.2 million, as compared with a trade deficit of U.S. $2,192.9 million for the same
period of 2002. Merchandise exports increased by 3.7% during the first four months of 2003, to U.S. $52,840.0 million, as compared with U.S. $50,942.7 million during the first four
months of 2002. During the first four months of 2003, petroleum exports increased by 56.6%, and non-petroleum exports decreased by 0.8%, in each case as compared with the same period of
2002. Exports of manufactured goods, which represented 84.1% of total merchandise exports, decreased by 1.7% during the first four months of 2003, as compared with the same period of 2002.

During
the first four months of 2003, total imports were U.S. $53,946.2 million, a 1.5% increase as compared with the same period of 2002. Imports of intermediate goods increased
by 2.3%, imports of capital goods decreased by 7.5% and imports of consumer goods increased by 6.6% during the first four months of 2003, each as compared with the same period of 2002.



According to preliminary figures, during 2002, Mexico's current account registered a deficit of U.S. $13,915 million, or 2.2% of GDP, U.S.
$4,152 million less than the current account deficit registered in 2001. The capital account registered a surplus of U.S. $21,674 million in 2002, as compared with a surplus of U.S.
$25,182 million in 2001. Net foreign investment in Mexico totaled U.S. $13,242 million in 2002, and was comprised of direct foreign investment totaling U.S.$13,968 million and net
foreign portfolio investment (including securities placed abroad) outflows totaling U.S.$726 million.

According
to preliminary figures, during the first quarter of 2003, Mexico's current account registered a deficit of 1.4% of GDP, or U.S. $2,141 million. The capital account
surplus for the first quarter of 2003 totaled U.S. $7,164 million. During the first quarter of 2003, direct foreign investment totaled U.S. $2,570 million and net foreign portfolio
investment (including securities placed abroad) registered an inflow of U.S. $3,033 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 allowed Banco de México to accumulate international assets without creating distortions in the currency markets. Through this mechanism, Banco de
México accumulated U.S. $12,177 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. Accordingly, on May 18, 2001, the Foreign
Exchange Commission decided to suspend until further notice the sale of options after the auction held June 29, 2001.

On
March 20, 2003, the Foreign Exchange Commission announced that it had adopted a new mechanism to moderate the rate of accumulation of international reserves expected in 2003.
Under the new mechanism, Banco de México sells dollars directly in the foreign exchange market according to the following rules:



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The
daily auction procedure commenced on May 2, 2003, based on the accumulation of net international reserves registered in the period from January 17 to April 16,
2003. On April 22, 2003, Banco de México announced that the daily amount of dollars to be auctioned pursuant to this procedure for the period from May 2, 2003 to
July 31, 2003 would be U.S. $32 million.

At
December 31, 2002, Mexico's international reserves totaled U.S. $47,984 million, an increase of U.S. $7,104 million from the level at December 31, 2001.
The net international assets of Banco de México totaled U.S. $50,722 million at December 31, 2002, an increase of U.S. $5,865 million from the level at
December 31, 2001. At June 13, 2003, Mexico's international reserves totaled U.S. $53,652 million, an increase of U.S. $5,668 million from the level at December 31,
2002. The net international assets of Banco de México totaled U.S. $55,318 million at June 13, 2003, an increase of U.S. $4,596 million from the level at
December 31, 2002.



During 2002, direct foreign investment in Mexico notified to the National Foreign Investment Commission totaled approximately U.S. $9.7 billion. Total
accumulated direct foreign investment in Mexico during the 1998-2002 period amounted to approximately U.S. $71.5 billion. Of the total direct foreign investment accumulated during
the 1998-2002 period, excluding that in securities, 45.8% has been channeled to industry, 53.3% to services, 0.7% to mining and 0.3% to agriculture and fishing.

During
2002, net foreign investment in Mexico, as recorded in the balance of payments, totaled U.S. $13.9 billion, and was comprised of direct foreign investment of U.S.
$13.2 billion and net portfolio investment (including securities placed abroad) outflows of U.S. $0.7 billion. During the first quarter of 2003, net foreign investment in Mexico, as
recorded in the balance of payments, totaled U.S. $5.6 billion and was comprised of direct foreign investment of U.S. $2.6 billion and portfolio investment of U.S. $3.0 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 October 1996, Banco de México has permitted 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 July 2, 2001, Banco de México sold U.S. $1,900 million under this program, auctioning

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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, January 12 and
13 and May 25, 1999 and on June 8, 2000.

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 auction mechanism for the contingent sale of dollars. The suspension took effect as of
July 2, 2001.

During
2002, the average peso/U.S. dollar exchange rate was Ps. 9.6616 = U.S. $1.00 as compared to Ps. 9.3395 = U.S.$1.00 in 2001. During the first five months of 2003, the
monthly average peso/U.S. dollar exchange rate was Ps. 10.6564 = U.S. $1.00. The peso/U.S. dollar exchange rate announced by Banco de México on June 20, 2003 (to take
effect on the second business day thereafter) was Ps. 10.4669 = 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:



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



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In 2002, public sector budgetary revenues were less than public sector budgetary expenditures (excluding off-budget revenues and expenditures of the
public sector) by approximately Ps. 72,086.1 million in nominal terms, or approximately Ps. 18,890.5 million in constant pesos with purchasing power at December 31, 1993,
reflecting an increase of 4.4% in real terms over budgetary revenues for 2001. Within budgetary revenues, non-oil tax revenues increased 3.5% in real terms, while oil related revenues grew
at a real rate of 0.8%. Nevertheless, overall public sector revenues were 16.7 billion pesos lower than the total projected in the Revenues Law for 2002. This result is mainly attributable to
an overestimation of revenues associated with the fiscal measures approved by Congress in December, 2001.

The
public sector primary balance in 2002 was approximately Ps. 108,965.1 million in nominal terms, or approximately Ps. 28,554.8 million in constant pesos with purchasing
power at December 31, 1993, reflecting a decrease of 29.9% in real terms as compared to the public sector primary balance for 2001. The overall public sector balance registered a deficit of Ps.
75,606.6 million in nominal terms, or approximately Ps. 19,813.1 million in constant pesos with purchasing power at December 31, 1993, reflecting a decrease of 55.5% in real terms
as compared to the public sector balance for the same period of 2001.

Excluding
the accounting adjustment associated with the liquidation of Banrural, discussed below, public sector budgetary revenues were less than public sector budgetary expenditures by
approximately Ps. 34,152.1 million in nominal terms, or approximately Ps. 8,949.7 million in constant pesos with purchasing power at December 31, 1993, reflecting an increase of
3.6% in real terms over the budgetary revenues for 2001. The public sector primary balance was approximately Ps. 146,899.1 million in nominal terms or approximately Ps. 38,495.6 million
in constant pesos with purchasing power at December 31, 1993, reflecting a decrease of 5.5% in real terms as compared to the public sector primary balance for 2001. The overall public sector
balance registered a deficit of Ps. 37,672.6 million in nominal terms, or approximately Ps. 9,872.3 million in constant pesos with purchasing power at December 31, 1993,
reflecting a decrease of 14.6% in real terms as compared to the public sector balance for the same period of 2001.

In
accordance with the automatic adjustment mechanism contained in Article 32 of the 2002 Budget, and in response to lower than projected revenues, the Government cut expenditures
by Ps. 10.1 billion in nominal terms during the first quarter of 2002 in order to meet its fiscal targets for 2002. The Government did not cut expenditures during the remainder of 2002.

On
December 12, 2002, Congress approved the dissolution and liquidation of Banco Nacional de Crédito Rural, S.N.C., a governmental development bank, which will
create an estimated extraordinary expenditure of Ps. 48.9 billion. This expenditure will be offset by an estimated Ps. 11 billion to be gained from an amendment to the Retirement Systems
Savings Law approved by Congress on December 15, 2002, which will allow the Government to use a portion of workers' unclaimed retirement funds for this purpose. The Government will be
contingently liable to return these funds, with interest, if and when claimed by the workers entitled to them.



On December 14, 2002, Congress approved the Federal Annual Revenue Law for 2003 and on December 15, 2002, Congress approved the Federal Expenditure
Decree for 2003 (as approved, together with the Federal Annual Revenue Law for 2003, as approved, the "2003 Budget"). The 2003 Budget maintains fiscal discipline as the cornerstone of the economic
program, and contemplates a public sector deficit of 0.50% of GDP for 2003.

The
2003 Budget is based upon an estimated weighted average price of Mexico's oil exports of U.S. $18.35 per barrel and an estimated volume of oil exports of 1.86 million barrels
per day. The budget as originally proposed to Congress was based upon an estimated weighted average price of Mexico's oil exports of U.S. $17.00 per barrel. Congress' upward revision resulted in Ps.
24.7 billion of additional revenues with respect to the original proposal.

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The
2003 Budget includes the following tax measures, among others:



The
results for 2001 and 2002, the revised budget assumptions and targets for 2002 and the budget assumptions and targets for 2003 are set forth below.

2001 and 2002 Results;
2002 Revised Budget Assumptions and Targets;
2003 Budget Assumptions and Targets

|                                                       |  | 2001 Results |  | 2002 Results |  | First quarter
2003 Results |  | 2003 Budget
|------------------------------------------------------ |  | ------------ |  | ------------ |  | -------------------------- |  | -----------
|Real GDP growth (%)                                    |  | (0.3)(1)     |  | 0.9(1)       |  | 2.3(1)                     |  | 3.0        
|Increase in the national consumer price index (%)      |  | 4.4          |  | 5.7(1)       |  | 1.3                        |  | 3.0        
|Average export price of Mexican oil mix (U.S.$/barrel) |  | 18.57        |  | 21.54        |  | 26.48(1)                   |  | 18.35      
|Current account deficit as % of GDP                    |  | 2.9          |  | 2.2          |  | 1.4                        |  | 2.8        
|Average exchange rate (Ps./$1.00)                      |  | 9.339        |  | 9.6616       |  | 10.804                     |  | 10.100     
|Average rate on 28-dayCetes(%)                         |  | 11.3         |  | 7.1          |  | 8.8                        |  | 7.5        
|Public sector balance as % of GDP                      |  | (0.7)        |  | (1.23)(2)    |  | 1.7                        |  | (0.5)      
|Primary balance as % of GDP                            |  | 2.6          |  | 1.8(2)       |  | 5.2                        |  | N/A        

---

Under the 2003 Budget, the Government estimates that it will devote Ps. 271,305 million (24.5% of total budgetary programmable
expenditures) to education and Ps. 317,430 million (28.7% of total budgetary programmable expenditures) to health and social security.

The
Government also expects that it will devote Ps. 93,221 million (8.4% of total budgetary programmable expenditures) to housing and community development. In addition, the 2003
Budget contemplates that Ps. 158,474 million will be used for the debt service of the Government and that Ps. 26,408 million will be used for the debt service of the public sector
agencies included in the 2003 Budget.

According
to preliminary figures, during the four months of 2003, the public sector overall balance registered a surplus of Ps. 60.5 billion and the primary balance registered a
surplus of Ps. 131.0 billion, 69.5% higher in real terms than during the same period of 2002.

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 positive at December 31, 2002, 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

74

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regulating
liquidity ("Regulación Monetaria"). 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
2001, 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 further
this goal, the Mexican Government in the past has introduced 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. In July 2001, the Ministry of Finance and Public Credit, through Banco de México,
executed the first auction of ten-year fixed rate peso-denominated bonds. This was the first time that an instrument of this type was offered in the domestic market. 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:



At
December 31, 2002, the net internal debt of the Mexican Government totaled U.S. $79.6 billion, an increase of U.S. $4.0 billion (or 5.3%) from the U.S.
$75.6 billion. At December 31, 2002, the average maturity of internal debt was 816 days, as compared with 748 days at December 31, 2001.

At
April 30, 2003, the net internal debt of the Government was U.S. $75.6 billion, as compared with U.S. $79.6 billion outstanding as of December 31, 2002.

75

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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) |                            | $                                           | 34.9 |          
|                           | Mexican Government         |                                             |      | 34.8     
|                           |                            | Peso-denominated                            |      |          
|                           |                            | Foreign currency-denominated (Tesobonos)(2) |      |          
|                           | Budget-controlled agencies |                                             |      | 0.1      
|                           |                            | Peso-denominated                            |      |          
|                           |                            | Foreign currency-denominated                |      |          

---



At December 31, 2002, the gross external debt of the Government totaled U.S. $78.82 billion. Outstanding gross external debt decreased by
approximately U.S. $1.52 billion, or 1.9%, during 2002, from U.S. $80.34 billion at December 31, 2001, to U.S. $78.82 billion at December 31, 2002. Of the total
external debt at December 31, 2002, U.S. $76.03 billion represented long-term debt and U.S. $2.80 billion represented short-term debt. Overall, total net
public debt at December 31, 2002 represented approximately 25.2% of nominal GDP, 1.8 percentage points higher than at the end of 2001.

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,   |      |                                                 |        |                                               |        |                                 |        |                       |        |                        |       |                                 
|               | 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 |                                 
|               | 2001 |                                                 | 44,070 |                                               | 10,361 |                                 | 22,224 |                       | 76,655 |                        | 3,684 |                                 
|               | 2002 |                                                 | 43,554 |                                               | 10,630 |                                 | 21,845 |                       | 76,029 |                        | 2,789 |                                 
|March 31, 2003 |      | 46,417                                          |        | 9,905                                         |        | 21,407                          |        | 77,729                |        | 4,096                  |       | 81,825                          

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By Currency(3)

|                |       | December 31, |        | March 31,
|--------------- | ----- | ------------ | ------ | ---------
|
|
|U.S. Dollars    |       | 74,551       |        | 80.8     
|Japanese Yen    |       | 6,956        |        | 7.5      
|Deutsche Marks  |       | 4,132        |        | 4.5      
|Pounds Sterling |       | 838          |        | 0.9      
|French Francs   |       | 1,910        |        | 2.1      
|Swiss Francs    |       | 265          |        | 0.3      
|Others          |       | 3,642        |        | 3.9      
|                |       |              |        |          
|                | Total |              | 92,295 |          
|                |       |              |        |          

---

Outstanding gross external debt increased by approximately U.S. $4.7 billion in the first four months of 2003, from U.S.
$78.8 billion at December 31, 2002 to U.S. $83.6 billion at April 30, 2003. Of this amount, U.S. $79.3 billion represented long-term debt and U.S.
$4.2 billion represented short-term debt.

Subsequent
to December 31, 2002:



On
May 15, 2003, Mexico redeemed all of its outstanding Collateralized Fixed Rate Bonds due 2019, USD Par Series A and USD Par Series B (the "Par Bonds"), totaling
approximately U.S. $4.34 billion. The Par Bonds were originally issued as part of Mexico's February 1990 restructuring process, and were the last outstanding series of Mexican Brady
Bonds denominated in dollars. Only 3.63% of the U.S. $34.25 billion aggregate amount of Brady Bonds originally issued currently remains outstanding; Mexico has announced that these Brady Bonds
will be redeemed on July 28, 2003. The payment of the redemption price of the Par Bonds was financed by the proceeds of Mexico's issuance in April 2003 of U.S.$1,500,000,000 of its
4.625% Global Notes due 2008 and U.S.$1,000,000,000 of its 7.500% Global Notes due 2033, as well as with a U.S. $2.00 billion one-year credit facility that Mexico entered into on
April 7, 2003 with Barclays Bank PLC and JPMorgan Chase Bank, as lenders. Upon receipt of the proceeds of the April 2003 issuance, the commitments of the lenders under the credit
facility was reduced to approximately $1.37 billion.

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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:



78

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Critical Accounting Policies

Our significant accounting policies are more fully described in Notes 2 and 19 to the Financial Statements. Some of our accounting policies require the
application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to a degree of uncertainty
and are based on our historical experience, terms of existing contracts, management's view of trends in the oil and gas industry, both macroeconomic and within Mexico, economic factors in Mexico and
information from outside sources. We believe the following critical accounting policies, among others, affect management's more significant judgments and estimates used in the preparation of our
consolidated financial statements and could potentially impact our financial results and future financial
performance. Unless otherwise stated, the following critical accounting policies apply for both Mexican and U.S. GAAP purposes.



Under Mexican GAAP, we annually determine a budgeted exploration and drilling cost per barrel based upon internal engineering studies. To determine the cost per
barrel, we take into consideration the budgeted exploration and drilling costs, the estimated annual production of oil and gas and the estimated percentage of non-successful wells. The
resulting per barrel amount is charged as costs of sales in our consolidated statement of income against the equity reserve established for exploration and drilling costs. Changes in the budgeted
exploration and drilling cost per barrel would impact on our recorded cost of sales expense. Under U.S. GAAP, the budgeted exploration and drilling cost recognized as part of the equity reserve is
reversed.



We apply the successful efforts method of oil and gas accounting. This accounting principle requires that capitalized costs for producing properties be amortized
on the basis of crude oil and natural gas reserve quantities. Our reserve estimates are determined in accordance with earth science and petroleum engineering principles and practices in accordance
with Rule 4-10 of Regulation S-X of the Securities Act of 1933 and can vary as a result of changes in such factors as forecasted oil and gas prices, reservoir
performance, oil field technology and audits by independent engineers.

Downward
revision in our reserve estimates can result in either: (a) higher depreciation and depletion expense per barrel in future periods, or (b) an immediate
write-down of the asset's book value in accordance with accounting rules for the impairment of properties. The latter condition would result if the downward revisions were so significant
that the estimated future cash flows from the remaining reserves in the field were insufficient to recover the unamortized capitalized costs. Conversely, if the oil and gas reserve quantities were
revised upward, our future per-barrel depreciation and depletion expense would be lower.

The
application of successful efforts accounting can also cause material fluctuations between periods in exploration expense if drilling results are different than expected or if we
change our exploration and development plans. The determination that exploratory drilling was unsuccessful in finding economically producible reserves requires the immediate expensing of previously
capitalized drilling costs.



We also make judgments and estimates in recording liabilities for environmental cleanup as well as asset retirement obligations. Estimated liabilities for
environmental remediation and asset retirement obligations are subject to change because of matters such as changes in laws, regulations and their interpretation, the
determination of additional information on the extent and nature of site contamination, the determination of additional works which need to be undertaken, improvements in technology, timing of
expenditures, and the foreign currency exchange rates to the extent that some of these costs are incurred in U.S. dollars. In addition, with respect to offshore properties, our historical
dismantlement and plugging experiences have been very limited, and therefore, our estimates of the expected cost or salvage value may vary from what will actually be incurred for many of these
long-term properties when these activities are ultimately undertaken.

79

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While
we believe that our environmental remediation and asset retirement obligation provisions are adequate and that the interpretations applied of existing law are appropriate, the
amounts estimated for the future liabilities may differ materially from the costs that will actually be incurred to remediate our properties. If we determine that an insufficient environmental
remediation or asset retirement obligation provision has been created, earnings will be adjusted as appropriate in the period that the determination is made.



We provide a range of benefits to our current and retired employees, including pensions, post-retirement health care benefits and
post-employment benefits (primarily health services and supplemental payments). We annually record amounts relating to these plans based on calculations specified by Mexican and U.S. GAAP,
respectively, which include various actuarial assumptions, such as discount rates, assumed rates of return, compensation increases, turnover rates and health care cost trend rates. We review our
actuarial assumptions on an annual basis and make modifications to the assumptions based on current rates and trends when it is deemed appropriate to do so. As required by Mexican and U.S. GAAP, the
effect of the modifications is generally recorded or amortized over future periods. We believe that the assumptions utilized in recording our obligations under our plans, which are presented in Notes
11 and 19 II b) and c) to the Financial Statements, are reasonable based on our experience and advice from our independent actuaries.



On January 1, 2001, we adopted Bulletin C-2 for Mexican GAAP purposes. Bulletin C-2 provides for the definition of financial
instruments, including derivative financial instruments and requires that all financial instruments, with the exception of "held to maturity" investments and certain derivative instruments that
qualify as hedges, to be recorded at fair value with the fair value adjustment recognized in earnings. Held to maturity investments are recorded at amortized cost subject to an impairment review.
Unlike U.S. GAAP and its interpretations, which are described below, Bulletin C-2 is not descriptive when it comes to defining "embedded" derivatives or hedge effectiveness testing or
documentation. To date, no additional interpretative guidance has been issued by the Mexican Institute of Public Accountants (MIPA), and therefore, our implementation of the standard is based on what
we believe is best practice but may not be similar to the interpretation of other Mexican companies or any contemplated but not yet issued guidance by the MIPA. Should additional interpretative or
best
practice guidance be issued in the future, this may impact how we have accounted for our financial instruments under Bulletin C-2. Our determination of fair value of financial instruments
for both Mexican and U.S. GAAP employed the same methodologies, which are further discussed below.

On
January 1, 2001, we also adopted SFAS No. 133 for U.S. GAAP purposes, and in accordance with the current transition provisions of SFAS No. 133, we recorded a
cumulative effect transition after tax decrease in net loss of Ps. 3,791.3 million to recognize the fair value of our derivatives and embedded derivatives at the date of adoption.

As
quoted market prices for certain derivatives used by us are not readily available, the fair value of these derivatives has been calculated using common market valuation methods and
value-influencing market data at the relevant balance sheet date as follows:



80

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The
use of valuation models requires us to make assumptions and estimates regarding the volatility of derivative contracts at the balance sheet date, and actual results could differ
significantly due to fluctuations in value-influencing market data. The valuation models for the interest rate and currency derivatives are based on calculations and valuations using a
group-wide financial reporting system, which provides consistent market data and valuation algorithms throughout our organization. The algorithms used
to obtain valuations are those which are commonly used in the financial markets. In certain cases, the calculated fair value of derivatives is compared with results which are produced by other market
participants, including banks, as well as those available through other internally available systems. The valuations of commodity instruments are delivered utilizing common valuation techniques and
models as described above.

Through
internal guidelines (i.e., group-wide financial guidelines), we ensure that the derivatives used for risk management purposes are only utilized to hedge booked,
contracted or planned underlying transactions. We calculate and assess market risks in accordance with the policies outlined in "Item 11Quantitative and Qualitative Disclosures About
Market Risk."

Contracts
providing for physical delivery in Mexico are currently accounted for as contracts with no derivative components, as no sufficient natural gas market mechanism or spot market
exists in Mexico so as to allow us to classify gas as readily convertible to cash. In the future, it is possible that a sufficient market mechanism or spot market for natural gas could emerge
resulting in a need to reassess the Mexican contracts for derivatives under SFAS No. 133. If any such reassessment resulted in contracts being accounted for as derivatives under SFAS
No. 133, the impact on future operating results could be significant.



In addition to our oil and gas assets that could become impaired under the application of successful efforts accounting, other assets could become impaired and
require write-down if circumstances warrant. Conditions that could cause our assets to become impaired include lower-than-forecasted commodity sales prices, changes
in our business plans or a significant adverse change in the national or international business climate. The amount of an impairment charge would be based on estimates of an asset's fair value
compared with its book value. While we believe that our estimates of future cash flows are reasonable, different assumptions regarding project commodity sales prices, production costs and foreign
currency exchange rates and inflation could materially affect the anticipated cash flows to be generated by the long-lived assets, thereby affecting the evaluations of the carrying values
of the long-lived assets.

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 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.

81

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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   |  |                        

---



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, SFP 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 IEPS Tax as described below, as well as the value added tax. We charge the IEPS Tax only on gasoline and diesel. 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.

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

|                             |             | 1998 |        | 1999 |   | 2000   |      | 2001 |        | 2002
|---------------------------- | ----------- | ---- | ------ | ---- | - | ------ | ---- | ---- | ------ | ----
|
|Oil Products                 |             |      |        |      |   |        |      |      |        |     
|Unleaded regular gasoline(1) |             | $    | 63.11  |      | $ | 41.53  |      | $    | 75.57  |     
|Premium gasoline(1)          |             |      | 69.83  |      |   | 49.76  |      |      | 83.38  |     
|Jet fuel(2)                  |             |      | 18.85  |      |   | 17.04  |      |      | 22.41  |     
|Kerosene(3)                  |             |      | 49.71  |      |   | 19.04  |      |      | 62.59  |     
|Natural Gas(4)               |             |      |        |      |   |        |      |      |        |     
|                             | Industrial  |      |        | 2.05 |   |        | 3.09 |      |        | 2.18
|                             | Residential |      |        | 4.56 |   |        | 6.97 |      |        | 4.65
|Selected Petrochemicals      |             |      |        |      |   |        |      |      |        |     
|Ammonia(5)                   |             |      | 118.04 |      |   | 136.36 |      |      | 95.37  |     
|Polyethylene L.D.(6)         |             |      | 874.05 |      |   | 978.71 |      |      | 915.04 |     
|Polyethylene H.D.(7)         |             |      | 865.70 |      |   | 910.93 |      |      | 830.67 |     
|Styrene(8)                   |             |      | 478.30 |      |   | 519.07 |      |      | 590.12 |     

---

IEPS Tax, Excess Gains Duty, Hydrocarbon Duties and Other Taxes

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

Year ended December 31,2000

2001

2002(in millions of pesos)Hydrocarbon extractions duties and other taxes

Ps.
224,211

Ps.
168,264

Ps.
179,099IEPS Tax


69,557


95,199


114,491Total

Ps.
293,768

Ps.
263,463

Ps.
293,590


---

83

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The IEPS Tax ensures that we retain the portion of our sales revenues that represents the adjusted international reference prices of our products, and it also 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.

In
addition to the IEPS Tax, we are subject to a number of other federal taxes and duties. In 2002, the sum of these taxes and duties totaled Ps. 293,590 million, including the
IEPS Tax, and in 2003 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. 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 2002, this price was U.S. $15.50 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
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 income because they are pass-through taxes that we collect from consumers and transfer to the Mexican Government.

Relation 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. SFP 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History and DevelopmentCapital Expenditures and Investments."

Inflation

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. The annual inflation rate decreased to 12.3% in 1999, 9.0%
in 2000 and 4.4% in 2001, and increased to 5.7% in 2002.

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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 2 b) to the Financial Statements.

For
2000, 2001 and 2002, 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.

Consolidation

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 2 c) to the Financial Statements. Beginning in 2000, we began consolidating the results and financial condition of Mex Gas International Ltd. For
U.S. GAAP purposes, beginning in 2001, we began consolidating the results and financial condition of Pemex Finance, Ltd.

Export Agreements

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). Mexico agreed to reduce exports by 100 thousand barrels per day, while Venezuela agreed to reduce its output by
200 thousand barrels per day and Saudi Arabia by 300 thousand barrels per day, 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

85

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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. Mexico maintained that level of exports throughout 2002. In
January 2003, as a result of increasing market demand, Mexico agreed to increase its crude oil exports by 100 thousand barrels per day to a level of 1.76 million barrels per day.
In February 2003, in light of the loss of more than 2 million barrels per day of Venezuelan crude oil, Mexico announced a further 120 thousand barrel per day increase in its crude
oil export to a level of 1.88 million barrels per day.

Results of Operations of Petróleos Mexicanos, the Subsidiary Entities and the Subsidiary CompaniesFor the Year Ended December 31, 2002
Compared to the Year Ended December 31, 2001



In 2002, PEMEX reported a loss of Ps. 30.5 billion on Ps. 372.9 billion in total revenues net of the IEPS Tax, as compared with a loss of Ps.
34.1 billion on Ps. 362.2 billion in total revenues net of the IEPS Tax in 2001. This 10.6% decrease in losses from 2001 to 2002 resulted primarily from:



Total
sales, net of the IEPS Tax, were Ps. 366.9 billion in 2002, an increase of 4.8% from 2001 total sales, net of the IEPS Tax, of Ps. 350.1 billion. The increase in
total sales from 2001 to 2002 resulted primarily from an increase in crude oil export prices.



In 2002, total consolidated export sales increased by 18.2% 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. 141.5 billion in 2001 to Ps. 167.2 billion in 2002. Excluding the trading activities of the PMI Group, export sales by the subsidiary
entities to the PMI Group and third parties increased by 17.1% in peso terms, from Ps. 120.7 billion in 2001 to Ps. 141.4 billion in 2002, and increased as a percentage of total sales,
net of the IEPS Tax, from 36.6% in 2001 to 41.4% in 2002. In dollar terms, excluding the trading activities of the PMI Group, export sales (which are dollar-denominated) increased by 13.2% in 2002,
from U.S. $12.9 billion in 2001 to U.S. $14.6 billion in 2002. The trading and export activities of the PMI Group generated additional marginal revenues of Ps. 25.8 billion in
2002, 24.2% higher in real peso terms than in 2001, mainly due to the increased prices of crude oil that we exported and the strengthening of the dollar against the peso.

Crude
oil sales by Pemex-Exploration and Production to PMI for export accounted for 91.1% of export sales (excluding the trading activities of the PMI Group) in 2002, as compared to
92.1% in 2001. These crude oil sales increased in peso terms by 15.8% in 2002, from Ps. 111.2 billion in 2001 to Ps. 128.8 billion in 2002, and increased in dollar terms by 11.8% in
2002, from U.S. $11.9 billion in 2001 to U.S. $13.3 billion in 2002. This increase was a result of higher crude oil prices, which was partially offset by a 3.0% decrease in the volume of
crude oil exported. The weighted average price per barrel of crude oil that Pemex-Exploration and Production sold to PMI for export in 2002 was U.S. $21.31, 14.8% higher than the weighted average
price of U.S. $18.57 in 2001.

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
7.0% of export sales (excluding the trading

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activities
of the PMI Group) in 2001 to 8.1% in 2002. Export sales of petroleum products, including natural gas liquids, increased by 35.3%, from Ps. 8.5 billion in 2001 to Ps.
11.5 billion in 2002, due to increases in the volume of exports of these products. In dollar terms, export sales of petroleum products, including natural gas liquids, increased by 32.3%, from
U.S. $907 million in 2001 to U.S. $1.2 billion in 2002.

Petrochemical
products accounted for the remainder of export sales in 2001 and 2002. Export sales of petrochemical products (including certain by-products of the
petrochemical process) increased by 10.0%, from Ps. 1.0 billion in 2001 to Ps. 1.1 billion in 2002, due to the combination of increases in ammonia sales with decreases in ethylene and
polyethylenes sales. In dollar terms, export sales of
petrochemical products (including certain by-products of the petrochemical process) decreased by 2.2% in 2002, from U.S. $115.4 million in 2001 to U.S. $112.9 million in
2002.



Domestic sales, net of the IEPS Tax, decreased by 4.3% in 2002, from Ps. 208.7 billion in 2001 to Ps. 199.8 billion in 2002. Domestic sales of
petroleum products other than natural gas decreased by 5.6% in 2002, from Ps. 171.0 billion in 2001 to Ps. 161.5 billion in 2002, primarily due to a decrease in the domestic prices of
our principal petroleum products. Domestic petrochemical sales (including sales of certain by-products of the petrochemical production process) decreased 6.8%, from Ps. 8.8 billion
in 2001 to Ps. 8.2 billion in 2002, due to a fall in domestic demand. Sales of natural gas increased 4.2% in 2002, from Ps. 28.9 billion in 2001 to Ps. 30.1 billion in 2002, as a
result of an increase in volumes of natural gas sold.



Other revenues decreased by 32.9%, from Ps. 8.2 billion in 2001 to Ps. 5.5 billion in 2002, primarily due to decreased freight revenues from the
distribution of petroleum products and liquefied petroleum gas due to lower transported volumes. We recorded exchange gains of Ps. 425.9 million in 2002, as compared to exchange gains of Ps.
3.9 billion in 2001, primarily due to the effect of an increase in the peso/dollar exchange rate on our dollar-denominated operations, from Ps. 9.1423 = U.S. $1.00 at the end of 2001 to
Ps. 10.3125 = U.S. $1.00 at the end of 2002, and fluctuations in the exchange rate during the year.



Costs of sales, transportation and distribution expenses and administrative expenses decreased by 1.0%, from Ps. 207.0 billion in 2001 to Ps.
204.9 billion in 2002. This decrease was due to a reduction in product purchases and an increase in the valuation of ending inventory of crude oil and petroleum products (which is accounted for
as a reduction in cost of sales), which were only partially offset by increases in depreciation and in the labor reserve for pension obligations. Other expenses decreased by 15.2%, from Ps.
6.6 billion in 2001 to Ps. 5.6 billion in 2002, primarily due to decreased freight expenses for the distribution of liquefied petroleum gas.



Net interest expense increased by 5.3%, from Ps. 13.1 billion in 2001 to Ps. 13.8 billion in 2002. This increase was mainly due to increased
financial costs arising from the sale of future accounts receivables.



Hydrocarbon extraction duties and other duties and taxes (including the IEPS Tax) increased by 11.4%, from Ps. 263.5 billion in 2001 to Ps.
293.6 billion in 2002, largely due to an increase in total sales. We paid Ps. 13.8 billion in excess gains duties in 2002, which represents 39.2% of the amount of our sales revenues
derived from the difference between the actual crude oil prices at which Pemex-Exploration and Production sold to PMI, which averaged U.S. $21.31 per barrel for the Mexican weighted crude oil mix, and
the Mexican Government's crude oil price budgetary assumption of U.S. $15.50 per barrel. We paid Ps. 1.3 billion in excess gains duties in 2001.

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Results of Operations of PEMEXFor the Year Ended December 31, 2001 Compared to the Year Ended December 31, 2000



In 2001, we reported a loss of Ps. 34.1 billion on Ps. 362.2 billion in total revenues net of the IEPS Tax, as compared with a loss of Ps.
19.7 billion on Ps. 409.1 billion in total revenues net of the IEPS Tax in 2000. This 73.1% increase in losses from 2000 to 2001 resulted primarily from:



Our
total sales, net of the IEPS Tax, were Ps. 350.1 billion in 2001, a decrease of 12.2% from 2000 total sales, net of the IEPS Tax, of Ps. 398.7 billion. The decrease in
total sales from 2000 to 2001 resulted primarily from a decrease in crude oil export prices, which decreased crude oil export revenues, and a decrease in the prices of the principal petroleum products
that we sold in the domestic market.



In 2001, total consolidated export sales decreased by 19.3% 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. 175.4 billion in 2000 to Ps. 141.5 billion in 2001. Excluding the trading activities of the PMI Group, export sales by the subsidiary
entities to the PMI Group and third parties decreased by 19.9% in peso terms, from Ps. 150.7 billion in 2000 to Ps. 120.7 billion in 2001, and decreased as a percentage of total sales,
net of the IEPS Tax, from 40.3% in 2000 to 36.6% in 2001. In dollar terms, excluding the trading activities of the PMI Group, export sales (which are dollar-denominated) decreased by 18.9% in 2001,
from U.S. $15.9 billion in 2000 to U.S. $12.9 billion in 2001. The trading and export activities of the PMI Group generated additional marginal revenues of Ps. 20.8 billion in
2001, 15.8% lower in real peso terms than in 2000, mainly due to the decrease in the prices of crude oil that PEMEX exported.

Crude
oil sales by Pemex-Exploration and Production to PMI for export accounted for 92.1% of export sales (excluding the trading activities of the PMI Group) in 2001, as compared to
91.2% in 2000. These crude oil sales decreased in peso terms by 19.0% in 2001, from Ps. 137.3 billion in 2000 to Ps. 111.2 billion in 2001, and decreased in dollar terms by 17.9% in
2001, from U.S. $14.5 billion in 2000 to U.S. $11.9 billion in 2001. This decrease reflected the fall 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 2001 was U.S. $18.57, 24.6% lower than the weighted average price of U.S. $24.62 in 2000.

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
7.3% of export sales (excluding the trading activities of the PMI Group) in 2000 to 7.0% in 2001. Export sales of petroleum products, including natural gas liquids, decreased by 22.7%, from Ps.
11.0 billion in 2000 to Ps. 8.5 billion in 2001, due to lower prices in international markets and lower export volumes of certain products. In dollar terms, export sales of petroleum
products, including natural gas liquids, decreased by 22.0%, from U.S. $1,164 million in 2000 to U.S. $907 million in 2001.

Petrochemical
products accounted for the remainder of export sales in 2000 and 2001. Export sales of petrochemical products (including certain by-products of the
petrochemical process) decreased by 58.3%, from

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Ps.
2.4 billion in 2000 to Ps. 1.0 billion in 2001, due to decreases in both demand and prices of several products. In dollar terms, export sales of petrochemical products (including
certain by-products of the petrochemical process) decreased by 52.6% in 2001, from U.S. $243.5 million in 2000 to U.S. $115.4 million in 2001.



Domestic sales, net of the IEPS Tax, decreased by 6.5% in 2001, from Ps. 223.3 billion in 2000 to Ps. 208.7 billion in 2001. Domestic sales of
petroleum products other than natural gas decreased by 7.7% in 2001, from Ps. 185.2 billion in 2000 to Ps. 171.0 billion in 2001, primarily due to a fall in the domestic prices of our
principal petroleum products. Domestic petrochemical sales (including sales of certain by-products of the petrochemical production process) decreased 20.7%, from Ps. 11.1 billion in
2000 to Ps. 8.8 billion in 2001, due to a decrease in the domestic market demand for the principal petrochemical products. Sales of natural gas increased 7.0%, from Ps. 27.0 billion in
2000 to Ps. 28.9 billion in 2001, as a result of an increase in domestic demand in 2001.



Other revenues decreased 13.7%, from Ps. 9.5 billion in 2000 to Ps. 8.2 billion in 2001, primarily due to decreased revenue from freight charges in
connection with the distribution of our products. We recorded exchange gains of Ps. 3.9 billion in 2001, as compared to exchange gains of Ps. 0.9 billion in 2000, 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 7.4%, from Ps.
192.7 billion in 2000 to Ps. 207.0 billion in 2001. This increase was due to increases in the labor reserve for pension obligations, depreciation and amortization, salaries and wages and
the loss resulting from the fluctuation of product inventory. Costs related to the labor reserve for pension obligations increased by 13.0%, from Ps. 29.9 billion in 2000 to Ps.
33.8 billion in 2001. Other expenses increased by 24.5%, from Ps. 5.3 billion in 2000 to Ps. 6.6 billion in 2001, primarily due to an increase in the natural gas hedging
operations.



Hydrocarbon extraction duties and other duties and taxes (including the IEPS Tax) decreased by 10.3%, from Ps. 293.8 billion in 2000 to Ps.
263.5 billion in 2001, largely because of the decrease in international crude oil prices in 2001 and the resulting decrease in sales revenue. We paid Ps. 1.3 billion in excess gains
duties in 2001, 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. $18.57 per
barrel for the Mexican weighted crude oil mix, and the Mexican Government's crude oil price budgetary assumption of U.S. $18.00 per barrel. We paid Ps. 21.2 billion in excess gains duties in
2000.



Net interest expense increased by 95.5%, from Ps. 6.7 billion in 2000 to Ps. 13.1 billion in 2001. This increase was mainly due to a decrease in
capitalized interest incurred in respect of fixed assets and the recognition of the current period loss resulting from the application of Bulletin C-2, the new financial instrument
standard.



In 2001, we adopted Bulletin C-2, which resulted in a loss of Ps. 1, 331 million primarily attributable to the accounting for the Repsol equity
swap, as described in Note 2 o) to the Financial Statements.

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Liquidity and Capital Resources



Our total equity as of December 31, 2002 was Ps. 100.7 billion, and our total capitalization (long-term debt plus equity) amounted to
Ps. 291.7 billion.

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 at the exchange rates in effect at the date payments are made. 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
1998 to 2002, 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 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 in principal and interest under that arrangement. No advance payments of
principal were made in 2001. In 2002, Petróleos Mexicanos paid principal of U.S. $874 million to the Mexican Government. 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 |  | $                      

---

Note: Numbers may not total due to rounding Source: PEMEX's financial statements.

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During 2002, net funds provided by operating activities were Ps. 39.7 billion, a 51.5% increase from Ps. 26.2 billion in 2001. Funds from income
(which was negative in 2002) plus items that did not require cash outlays totaled Ps. 46.5 billion in 2002. New debt financings provided an additional Ps. 106.6 billion of funds
(excluding Ps. 23.8 billion of foreign exchange losses). During 2002, we applied net funds of Ps. 102.1 billion for net investments at cost in fixed assets (Ps. 91.3 billion of
new investments and capitalized interest, less Ps. 12.3 billion in dispositions of fixed assets), plus Ps. 4.6 billion of capitalized foreign exchange losses and a Ps.
18.5 billion translation effect on subsidiary companies.

At
December 31, 2002, our cash and cash equivalents totaled Ps. 43.9 billion, as compared to Ps. 14.4 billion at December 31, 2001. At that time, we did not
have sufficient working capital, generated exclusively from operations, for our budgeted cash flow requirements for 2003. However, based on past experience, we expect to generate sufficient working
capital through:



Commercial
paper is issued under our U.S. $445 million U.S. commercial paper program that was established in December 2001 and is backed by a letter of credit from Barclays
Bank Plc. As of December 31, 2002 the unused portion of this program was U.S. $12 million. Commercial paper is usually issued with maturities of up to 6 months. We also
established a U.S. $650 million acceptance credit facility with a group of international banks and a U.S. $135 million acceptance credit facility with Japanese banks in 2001. Lines of
credit are obtained from major international banks with maturities ranging from 1 month up to 18 months. As of December 31, 2002, we had U.S. $2.0 billion in lines of
credit, of which U.S. $452 million was unused. See also "Commitments for Capital Expenditures and Sources of Funding" below.

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.



Our current aggregate commitments for capital expenditures, including PIDIREGAS, total approximately Ps. 127.2 billion for 2003. 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
2002, Pemex-Exploration and Production invested in 26 PIDIREGAS (including 22 new PIDIREGAS, which were added to our budget in 2002) and other general operating investments and
strategic products for a total of Ps. 71.9 billion in capital expenditures in exploration and production in 2002. In 2003, Pemex-Exploration and Production will still have 27 PIDIREGAS in its
budget, (including Yaxche, with no expenses for 2002), for which Ps. 89.0 billion is budgeted in 2003. In addition, Pemex-Exploration and Production has budgeted Ps. 22.6 billion for
non-PIDIREGAS capital expenditures for 2003. 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 two PIDIREGAS in 2002 and invested in other general operating projects, strategic projection, acquisition of equipment, research and development and
complementary investments for a total

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of
Ps. 15.3 billion in capital expenditures by Pemex-Refining in 2002. In 2003, Pemex-Refining expects to invest Ps. 24.9 billion in capital expenditures. Of this amount, Pemex-Refining
has budgeted Ps. 16.5 billion for four PIDIREGAS (including amounts originally budgeted for projects in 2002 that are expected to be completed in 2003), and Ps. 8.3 billion for other
non-PIDIREGAS capital expenditures. 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 2003, the Mexican Government approved Ps. 1,460 million in capital expenditures for Pemex-Gas and Basic Petrochemicals' new PIDIREGAS. The combined capital expenditures for
Pemex-Gas and Basic Petrochemicals and Pemex-Petrochemicals are expected to be Ps. 6.9 billion in 2003. For more detail on the expenditures for and purpose of these investments, see
"Item 4Information on the CompanyBusiness OverviewGas and Basic PetrochemicalsInvestments" and
"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 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: we may issue debt securities in U.S. dollars, Japanese yen, euros, pounds sterling or Mexican pesos, among others; these securities may be issued with fixed or floating rates
and with maturities ranging between three and thirty years, depending on market conditions and funding requirements. Commercial bank syndicated loans may be established with single or multiple
tranches with maturities ranging between one and five years. Bilateral loans vary in tenor and range between two and three or more years. See also "Financing Activities" below.

As
described in "Financing Activities" below, we have thus far issued U.S. $3.2 billion in debt securities in the international capital markets in 2003 through the
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. Petróleos Mexicanos has 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
investments are funded mainly through our operating revenues, and, to a lesser degree, financing activities. These financing activities consist primarily of
loans from export credit agencies. These loans are usually structured with maturities ranging between five and ten years with minimum amounts of U.S. $20 million.

In
order to be able to carry out our planned capital expenditure program, we will need to seek financing from a variety of sources, and we cannot guarantee that we will be able to obtain
financing on terms that would be acceptable to us. Our inability to obtain additional financing could have an adverse effect on our planned capital expenditure program and result in our being required
to limit or defer this program.



2003 Financing Activities.During the period from January 1 to May 31, 2003, Petróleos Mexicanos
obtained direct credits in the amount of U.S. $440 million for use in financing our working capital requirements, and the Pemex Project Funding Master Trust obtained U.S. $547.4 million
in commercial bank loans for use in financing PIDIREGAS projects. In addition, we participated in the following financing activities:



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In
the period from January 1 to May 31, 2003, Petróleos Mexicanos' net payments on borrowings totaled U.S. $1.6 billion and were as follows:



In
the period from January 1 to May 31, 2003, the Pemex Project Funding Master Trust's net payments on external borrowings totaled U.S. $484.2 million and were as
follows:



2002 Financing Activities.During the period from January 1, 2002 to December 31, 2002,
Petróleos Mexicanos obtained direct credits in the amount of U.S. $650 million for use in financing our working capital requirements, and the Pemex Project Funding Master Trust
obtained U.S. $1.8 billion in commercial bank loans for use in financing PIDIREGAS projects. In addition, we participated in the following financing activities:

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In
the period from January 1, 2002 to December 31, 2002, Petróleos Mexicanos' net payments on borrowings totaled U.S. $3.2 billion and were allocated
as follows:



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In
the period from January 1, 2002 to December 31, 2002, the Pemex Project Funding Master Trust's net payments on borrowings totaled U.S. $611 million and were
allocated as follows:



At
December 31, 2002, PEMEX's total debt, excluding accrued interest, was approximately U.S. $23 billion. Of this amount, U.S. $18.5 billion consisted of total
long-term debt, which was composed of approximately U.S. $12.2 billion in instruments with fixed annual interest rates ranging from 1.55% to 14.5% with maturities ranging from 2004
to 2027, approximately U.S. $6.3 billion in drawings under lines of credit at variable interest rates of which U.S. $5.5 billion was based on LIBOR with maturities ranging from 2004 to
2013, and U.S. $0.8 billion in floating rate notes with maturities ranging from 2004 to 2008. Short-term debt totaled approximately U.S. $4.5 billion, consisting of U.S.
$3.9 billion of variable interest rate borrowings under various lines of credit established under committed credit facilities with various international commercial banks and U.S.
$0.6 billion of lines of credit with fixed interest rates.

The
portion of PEMEX's total debt at December 31, 2002 corresponding to borrowings of the Pemex Project Funding Master Trust was U.S. $14.1 billion. This amount consisted
of U.S. $7.0 billion in long-term debt at fixed interest rates with maturities ranging from 2004 to 2023, U.S. $5.5 billion in long-term debt with variable
interest rates with maturities ranging from 2004 to 2013, and U.S. $1.6 billion in short-term debt of which U.S. $1.5 billion consisted of variable interest rate borrowings
under various lines of credit. The Pemex Project Funding Master Trust also has U.S. $4.2 billion in long-term debt consisting of an obligation to Pemex-Exploration and Production in
respect of funds allocated to the 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 offsetting
effects of the consolidation of the results of both Pemex-Exploration and Production and the Pemex Project Funding Master Trust (i.e., the effects of
intercompany indebtedness are eliminated).

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 its working capital requirements, and the Pemex Project Funding Master Trust obtained U.S.
$450 million in direct loans for use in financing PIDIREGAS projects. 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. $17.2 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 the 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. The 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 the 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 the Pemex Project Funding Master Trust (i.e., the
effects of intercompany indebtedness are eliminated).

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The
table below sets forth our total indebtedness as of December 31 for each of the five years from 1998 to 2002.

Total Indebtedness 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              
|                                       |                         |                                  
|Total Indebtedness(3)(11)(12)          |                         | $                                
|                                       |                         |                                  

---

Note: Numbers may not total due to rounding.



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

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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, 2002, the outstanding debt of Pemex Finance, Ltd. was composed of U.S. $4.7 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.

2002 Financing Activities.During 2002, Pemex Finance Ltd. made payments of U.S. $305.8 million in principal on
its notes. Pemex Finance Ltd. did not incur any additional indebtedness during 2002.

2001 Financing Activities.During 2001, Pemex Finance, Ltd. made payments of U.S. $230 million in principal on
its notes. Pemex Finance, Ltd. did not incur any additional indebtedness during 2001.

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. During 2000, Pemex Finance, Ltd. made payments of U.S. $185 million on borrowings.



Information about PEMEX's long-term contractual obligations and other commercial commitments outstanding at December 31, 2002 from the notes to
the Financial Statements is set forth in the table below. This information is important in understanding the financial position of PEMEX.

Contractual Obligations and Other Commercial Commitments Outstanding(1)

|                                                         |                              | Payment due by period
|-------------------------------------------------------- | ---------------------------- | ---------------------
|
|
|Long-term debt(2)                                        |                              | $                    
|Capital lease obligations(3)                             |                              |                      
|Notes payable to contractors(4)                          |                              |                      
|Sales of future accounts receivable(5)                   |                              |                      
|Minimum guaranteed dividends(6)                          |                              |                      
|Repsol equity swaps total(7)                             |                              |                      
|                                                         |                              |                      
|Total contractual cash obligations                       |                              | $                    
|                                                         |                              |                      
|Other Commercial Commitments                             |                              |                      
|Off balance sheet obligations:                           |                              |                      
|PIDIREGAS commitments(8)                                 |                              | $                    
|Nitrogen supply contract(9)                              |                              |                      
|                                                         |                              |                      
|                                                         | Total commercial commitments |                      
|                                                         |                              |                      
|Total contractual obligations and commercial commitments |                              | $                    
|                                                         |                              |                      

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The following tables set forth information regarding the fair value of PEMEX's over-the-counter (OTC) contracts in connection with gas trading activities as of
December 31, 2002:

Fair Value of OTC Contracts(1)

|(in thousands of U.S. dollars)                                     | 
|------------------------------------------------------------------ | 
|Fair value of contracts outstanding at the beginning of the period | 
|Contracts realized or otherwise settled during the period          | 
|Fair value of new contracts when entered into during the period    | 
|Other changes in fair values                                       | 
|                                                                   | 
|Fair value of contracts outstanding at the end of the period       | 
|                                                                   | 

---

Fair Value of OTC Contracts at Period-End by Maturity(1)

|Source of Fair Value                      |  | Maturity
less than
1 year |   | Maturity 1-3 years |  | Maturity
4-5 years |  | Maturity
in excess
of 5 years |  | Total fair
value |  
|----------------------------------------- |  | ------------------------- | - | ------------------ |  | ------------------ |  | ----------------------------- |  | ---------------- | -
|
|Prices actively quoted                    |  | (59,947                   | ) |                   |  |                   |  |                              |  | (59,947          | )
|Prices provided by other external sources |  | 5,201                     |   | 661                |  |                   |  |                              |  | 5,862            |  

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Results of Operations by Business Segment

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, 2002 as well
as the percentage change in sales revenues for the years 2000 to 2002.

|                                          |                                     | Year Ended December 31, |         |         |         |         |         
|----------------------------------------- | ----------------------------------- | ----------------------- | ------- | ------- | ------- | ------- | --------
|
|
|
|Exploration and Production                |                                     |                         |         |         |         |         |         
|                                          | Trade sales(1)                      |                         | Ps.     | 58,232  |         | Ps.     | 83,635  
|                                          | Intersegment sales                  |                         |         | 71,694  |         |         | 92,281  
|                                          |                                     |                         |         |         |         |         |         
|                                          |                                     | Total net sales         |         | Ps.     | 129,925 |         | Ps.     
|                                          |                                     |                         |         |         |         |         |         
|Refining                                  |                                     |                         |         |         |         |         |         
|                                          | Trade sales                         |                         | Ps.     | 147,078 |         | Ps.     | 187,381 
|                                          | Intersegment sales                  |                         |         | 6,722   |         |         | 6,700   
|                                          |                                     |                         |         |         |         |         |         
|                                          |                                     | Total net sales         |         | Ps.     | 153,799 |         | Ps.     
|                                          |                                     |                         |         |         |         |         |         
|Gas and Basic Petrochemicals              |                                     |                         |         |         |         |         |         
|                                          | Trade sales(1)                      |                         | Ps.     | 33,286  |         | Ps.     | 38,685  
|                                          | Intersegment sales                  |                         |         | 13,670  |         |         | 13,899  
|                                          |                                     |                         |         |         |         |         |         
|                                          |                                     | Total net sales         |         | Ps.     | 46,956  |         | Ps.     
|                                          |                                     |                         |         |         |         |         |         
|Petrochemicals                            |                                     |                         |         |         |         |         |         
|                                          | Trade sales(1)                      |                         | Ps.     | 10,507  |         | Ps.     | 10,105  
|                                          | Intersegment sales                  |                         |         | 1,870   |         |         | 1,930   
|                                          |                                     |                         |         |         |         |         |         
|                                          | Total net sales                     |                         | Ps.     | 12,377  |         | Ps.     | 12,036  
|                                          |                                     |                         |         |         |         |         |         
|Corporate, Subsidiary Companies and Other |                                     |                         |         |         |         |         |         
|                                          | Trade sales                         |                         | Ps.     | 7,885   |         | Ps.     | 15,007  
|                                          | Intersegment sales and eliminations |                         |         | (93,955 | )       |         | (114,810
|                                          |                                     |                         |         |         |         |         |         
|                                          |                                     | Total net sales         |         | Ps.     | (86,069 | )       | Ps.     
|                                          |                                     |                         |         |         |         |         |         
|Total Net Sales                           |                                     | Ps.                     | 256,987 |         | Ps.     | 334,814 |         
|                                          |                                     |                         |         |         |         |         |         

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The following table sets forth our income (loss) by business segment for each year in the five-year period ended December 31, 2002, as well as
the percentage change in income for the years 2000 to 2002.

|                 |                                           | Year Ended December 31, |     |        |         |     |       
|---------------- | ----------------------------------------- | ----------------------- | --- | ------ | ------- | --- | ------
|
|
|
|Business Segment |                                           |                         |     |        |         |     |       
|                 | Exploration and Production                |                         | Ps. | (9,027 | )       | Ps. | (5,202
|                 | Refining                                  |                         |     | (5,729 | )       |     | (8,111
|                 | Gas and Basic Petrochemicals              |                         |     | 5,121  |         |     | 849   
|                 | Petrochemicals                            |                         |     | (2,790 | )       |     | (4,474
|                 | Corporate, Subsidiary Companies and Other |                         |     | 837    |         |     | (4,219
|                 |                                           |                         |     |        |         |     |       
|                 |                                           | Total Income/(loss)     |     | Ps.    | (11,588 | )   | Ps.   
|                 |                                           |                         |     |        |         |     |       

---

Note:
Numbers may not total due to rounding. Source: PEMEX's financial statements.

2002 Compared to 2001



In 2002, Pemex-Exploration and Production's trade sales of crude oil and natural gas to the PMI Group increased by 15.8% in peso terms and by 11.8% in U.S. dollar
terms, as a result of the increase in the weighted average price of crude oil which was partially offset by a 3.0% decline in the volume of crude oil exported. The weighted average price of crude oil
sold by Pemex-Exploration and Production to the PMI Group for export was U.S. $21.31 in 2002, as compared to U.S. $18.57 in 2001. Intersegment sales decreased by 0.6%, principally as a result of lower
natural gas sales. Income related to exploration and production activities increased by 74.9% from Ps. 8,785 million in 2001 to Ps. 15,367 million in 2002, primarily as a result of the
increase in export sales and a decrease in product purchases.



In 2002, trade sales related to refining activities increased by 7.1%, from Ps. 239,230 million in 2001 to Ps. 256,273 million in 2002 due to an
increase in the IEPS Tax. Export sales related to refining activities increased by 154.7% from Ps. 2,486 million in 2001 to Ps. 6,333 million in 2002, as a result of an increase in sales
of fuel oil and virgin stock. Net of the IEPS Tax, domestic sales related to refining activities decreased by 4.6% from Ps. 141,545 million in 2001 to Ps. 134,998 million in 2002,
principally due to a decrease in the domestic prices of our principal petroleum products. Intersegment sales decreased by 10.2% to Ps. 7,890 million, largely due to a decrease in the sales of
liquefied petroleum gas. In 2002, the total loss related to refining activities was Ps. 35,321 million, 19.3% greater than the loss of Ps. 29,601 million in 2001. The increased loss was
primarily due to a decrease in the prices of domestic sales of our principal petroleum products (net of IEPS tax) and increases in the purchases of products due to higher prices and higher volume of
crude oil purchased.



In 2002, trade sales related to the natural gas and basic petrochemical business segment decreased by 4.4%, from Ps. 65,283 million in 2001 to Ps.
62,436 million in 2002. Liquefied petroleum gas sales decreased from Ps. 29,329 million in 2001 to Ps. 26,140 million in 2002, due to a decrease in the price of the product. The
volume of domestic sales of basic petrochemicals decreased by 0.9% in 2002, from 869 thousand tons per year in 2001 to 861 thousand tons per year in 2002. Natural gas sales increased by
4.2% from Ps. 28,917 million in 2001 to Ps. 30,122 million in 2002, mainly due to an increase in sales volume. Income related to natural gas and basic petrochemicals increased by 291.5%,
due to a decrease in costs of sales by a reduction in the value of product purchases from Pemex-Exploration and Production and third parties resulting from a fall in the price of natural gas, which
was partially offset by the decrease in sales of liquefied petroleum gas and basic petrochemical products discussed above.

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In 2002, trade sales related to the petrochemicals business segment decreased by 9.2%, from Ps. 9,014 million in 2001 to Ps. 8,187 million in 2002.
Prices and volumes for petrochemicals sold domestically decreased for a majority of our petrochemical products. In 2002, the volume of petrochemical exports increased by 28.1% from 302 thousand
tons in 2001 to 387 thousand tons in 2002. Losses related to petrochemical activities increased by 18.7% from Ps. 10,199 million in 2001 to Ps. 12,110 million in 2002, mainly due
to the recognition of a loss from the disposal of several plants of Ps. 2,279 million in 2002.



In 2002, additional marginal trade sales revenues relating to PMI's exports of crude oil and petroleum products to third parties and after intercompany
eliminations increased by 24.9% in peso terms, from Ps. 20,636 million in 2001 to Ps. 25,778 million in 2002, as a result of the strengthening of the dollar against the peso. In 2002,
the trade loss related to corporate, subsidiary companies and other, which includes the international trading activities of the PMI Group, decreased from Ps. 3.7 billion in 2001 to Ps.
883 million in 2002, primarily due the increase in total sales by PMI discussed above.

2001 Compared to 2000



In 2001, Pemex-Exploration and Production's trade sales of crude oil and natural gas to the PMI Group decreased by 19.0% in peso terms and by 17.9% in U.S. dollar
terms, as a result of a decrease of 24.6% 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. $18.57 in 2001, as compared to U.S. $24.62 in 2000. Intersegment sales decreased by 12.0%, principally as a result of a decrease
in crude oil and natural gas sales, resulting from decreases in the reference prices of these commodities. Income related to exploration and production activities increased 23.2% from Ps.
7,128 million in 2000 to Ps. 8,785 million in 2001, primarily as a result of a decrease in the excess gains revenue duties, which was offset by a 14.2% increase in costs associated with
the labor reserve for pension obligations from Ps. 10,351 million in 2000 to Ps. 11,821 million in 2001. The increase in labor reserve costs was due to an increase in salaries and wages,
an additional year of services by the personnel and an increase in the financial cost as a result of insufficient funding of these liabilities.



In 2001, trade sales related to refining activities increased by 4.0%, from Ps. 230,059 million in 2000 to Ps. 239,230 million in 2001. Export sales
related to refining activities decreased 32.0% from Ps. 3,654 million in 2000 to Ps. 2,486 million in 2001, as a result of a decrease in the volume of certain petroleum product exports.
Domestic sales related to refining activities increased by 4.6% from Ps. 226,405 million in 2000 to Ps. 236,744 million in 2001, principally due to increases in the peso prices of
refined products and the IEPS Tax, which increased by Ps. 25,642 million in 2001. Intersegment sales decreased by Ps. 812 million, largely due to decreases in the sales of naphthas and
propylene. In 2001 the total loss related to refining activities was Ps. 29,601 million, as compared to a loss of Ps. 23,139 million in 2000. The increased loss was primarily due to a
9.7% decrease in domestic sales net of the IEPS tax from Ps. 157.0 million in 2000 to Ps. 141.7 million in 2001, and a 10.4% increase in labor reserves costs from Ps.
10,933 million in 2000 to Ps. 12,074 million in 2001. This increase in labor reserve costs was due to an increase in salaries and wages, an additional year of services by the personnel
and an increase in the financial cost as a result of insufficient funding of these liabilities.



In 2001, trade sales related to the natural gas and basic petrochemical business segment increased by 2.1%, from Ps. 63,957 million in 2000 to Ps.
65,283 million in 2001. Natural gas sales increased by 7.1% from Ps. 26,997 million in 2000 to Ps. 28,917 million in 2001, mainly due to a price increase of approximately 8.3%.
The volume of domestic sales of basic petrochemicals increased by 10.7% in 2001, from 785 thousand tons per year in 2000 to 869 thousand tons per year in 2001. Income related to natural
gas and basic petrochemicals increased by 297.8%, from a

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loss
of Ps. 317 million in 2000 to a gain of Ps. 627 million in 2001, mainly due to a 23.1% decrease in imports of products used in the production process and the 2.1% increase in trade
sales mentioned above, partially offset by a 12.8% increase in labor reserves costs, from Ps. 2,152 million in 2000 to Ps. 2,428 million in 2001, resulting in an increase in the cost of
sales and operating expenses. This increase in labor reserve costs was due to an increase in salaries and wages, an additional year of services by the personnel and an increase in the financial cost
as a result of insufficient funding of these liabilities.



In 2001, trade sales related to the petrochemicals business segment decreased by 26.0%, from Ps. 12,184 million in 2000 to Ps. 9,014 million in
2001. Prices for petrochemicals sold domestically decreased for a majority of petrochemical products. In 2001, the volume of petrochemical exports decreased by 50.2% from 607 thousand tons in
2000 to 302 thousand tons in 2001. Losses related to petrochemical activities increased 67.5% from Ps. 6,090 million in 2000 to Ps. 10,199 million in 2001 due to decreases in both
volumes and sale prices and to a 13.6% increase in labor reserves costs from Ps. 2,702 million in 2000 to Ps. 3,069 million in 2001. This increase in labor reserve costs was due to an
increase in salaries and wages, an additional year of services by the personnel and an increase in the financial cost as a result of insufficient funding of these liabilities.



In 2001, additional marginal trade sales revenues relating to PMI's exports of crude oil and petroleum products to third parties and after intercompany
eliminations decreased by 16.6% in peso terms, from Ps. 24,735 million in 2000 to Ps. 20,636 million in 2001, as a result of a 25.1% reduction in the international price of crude oil,
which was offset by a 9.4% increase in the volume of PMI's crude oil sales. The weighted average price of crude oil sold by PMI was U.S. $18.57 in 2001, as compared to U.S. $24.78 in 2000. In 2001,
the total income related to corporate, subsidiary companies and other, which includes the international trading activities of the PMI Group, decreased from an income of Ps. 2.7 billion in 2000
to a loss of Ps. 3.7 billion in 2001, primarily due to our adoption of the new financial instrument standard (Bulletin
C-2). This compares to total income of Ps. 2.7 billion in 2000; primarily due to the recognition of a net gain in connection with the Repsol equity swap and collar unwind in that
year.

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 exploration and drilling costs, pension and post-retirement obligations, financial instruments and fixed asset adjustments relating to inflation accounting,
foreign exchange losses, capitalized interest, depreciation, impairment and profit in inventory. For further information regarding these and other differences between Mexican and U.S. GAAP as they
relate to our operating results, see Note 19 to the Financial Statements.



Under Mexican GAAP, PEMEX charges exploration and drilling costs 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 charge for each barrel of crude oil extracted in the
statement of operations and recording a credit to the equity reserve. Under U.S. GAAP, PEMEX initially capitalizes the costs of drilling exploratory wells and exploratory-type
stratigraphic test wells, which are subsequently charged to expense if proved reserves are not discovered. Development costs, including the costs of drilling development wells and
development-type stratigraphic test wells, are capitalized.



Seniority premiums and pension plans are treated differently under U.S. GAAP and Mexican GAAP because of the different actuarial cost assumptions and
implementation dates required by Bulletin D-3 and SFAS No. 87. Under Mexican GAAP, PEMEX accounts for supplemental payments under its Bulletin D-3 calculations. However,
PEMEX accounts for other health services benefits on a pay-as-you-go basis. Under U.S. GAAP, PEMEX follows

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the
guidelines of SFAS No. 106, which uses the transitional recognition method in accounting for health service and other supplemental payments provided to retirees.



On January 1, 2001, PEMEX adopted Bulletin C-2 for Mexican GAAP purposes, which provides guidance for the definition of financial instruments
and requires all financial instruments, with the exception of "held to maturity" instruments, to be recorded at fair value with the related adjustment recognized in earnings. "Held to maturity"
instruments and certain derivative instruments qualifying as hedges are to be recorded at amortized cost subject to impairment evaluation. For U.S. GAAP purposes, effective January 1, 2001,
PEMEX adopted SFAS No. 133 (as amended by SFAS No. 137 and SFAS No. 138), which establishes accounting and reporting standards for derivative instruments and hedging activities.
SFAS No. 133 requires that an entity recognize all derivatives as either assets or liabilities in the consolidated balance sheet and measure those instruments at fair value. SFAS No. 133
prescribes requirements for designation and documentation of hedging relationships and ongoing assessments of effectiveness in order to qualify for hedge accounting.

The
principal differences between the cumulative effect adjustment and current period income effect under Mexican GAAP and U.S. GAAP relate primarily to the accounting for cross currency
swaps, foreign currency embedded derivatives and the accounting for the equity swap contracts related to the Repsol shares described in Note 10 to the Financial Statements.

Fixed Asset Adjustments

Inflation accounting.Under Mexican GAAP, PEMEX recognizes the effects of inflation pursuant to NIF-06 BIS "A,"
section A, which requires the restatement of non-monetary assets, including inventories of materials and supplies, costs of sales and fixed assets to their net realizable value (in
the case of inventories) or through appraisals made by independent appraisers or by using the specific price index (in the case of fixed assets), with the difference being recorded as a revaluation
surplus in equity. U.S. GAAP does not require the recognition of the effects of inflation in the consolidated financial statements. Since 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 income and equity retroactively to 1992. Thus, 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.

Foreign currency exchange losses.Under Mexican GAAP, exchange losses arising from debt are capitalized as part of fixed
assets, and any remaining net exchange differences are reflected in the statement of operations as either a debit to costs and operating expenses or a credit to revenues. Under U.S. GAAP, all exchange
gains or losses have been recognized in results of operations.

Capitalization of interest.For Mexican GAAP purposes, PEMEX capitalizes interest to property, plant and equipment based on
the total interest cost incurred on loans allocated to construction projects, regardless of whether or not the amounts borrowed have been spent on such projects. For purposes of the U.S. GAAP
reconciliation, PEMEX capitalizes interest based upon total interest incurred in proportion to additions to construction in progress.

Depreciation.Under Mexican GAAP, PEMEX depreciates the book value of its fixed assets, which includes amounts capitalized
for foreign exchange losses and restatements for inflation. For U.S. GAAP purposes, PEMEX has reversed this depreciation expense attributable to foreign exchange losses and restatements for inflation.

Impairment.Under U.S. GAAP, SFAS No. 144 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 or

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is
permanently impaired. SFAS No. 144 requires PEMEX to write-down impaired assets to the fair value, if available, or the discounted present value of expected future cash flows on
related assets. 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-by-field basis.



Under Mexican GAAP, PEMEX values crude oil and derivatives for export at net realizable value with the difference between the net realizable value and cost
recorded in earnings. By contrast, U.S. GAAP requires that inventories be recorded at net realizable cost, but not to exceed cost. For U.S. GAAP purposes, PEMEX has eliminated the effect of
recognizing a profit within its inventory balance.



In addition to these differences between Mexican and U.S. GAAP, other significant differences that affect our operating results relate to the accounting for
accrued vacation, depreciation convention, profit in inventory and the sale of transport assets. See Note 19 to the Financial Statements.



For the year ended December 31, 2002, PEMEX's loss under U.S. GAAP was approximately Ps. 32.8 billion, representing a Ps. 2.3 billion
increase from the loss recorded under Mexican GAAP. For the year ended December 31, 2001, PEMEX's loss under U.S. GAAP was approximately Ps. 25.4 billion, representing a Ps.
8.6 billion decrease from the loss recorded under Mexican GAAP. 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 further detail regarding the adjustments related to these amounts, see Note 19 to the Financial Statements.

PEMEX's
deficit under U.S. GAAP was approximately Ps. 91.9 billion at December 31, 2002, as compared to a deficit of Ps. 42.3 billion at December 31, 2001.
For further detail regarding the adjustments related to these amounts, see Note 19 to the Financial Statements.



In November 2001, the MIPA issued revised Bulletin C-9, "Liabilities, Provisions, Contingent Assets and Liabilities and Commitments," which
supersedes existing Bulletin C-9, "Liabilities," and Bulletin C-12, "Contingencies and Commitments." The revised Bulletin C-9 establishes a methodology for the
following: valuation, presentation and disclosure of liabilities and provisions; valuation and disclosure of contingent assets and liabilities; and disclosure of commitments. Among other things,
Bulletin C-9 establishes guidelines for the recognition of liabilities and non-recognition of liabilities in the event of extinguishments, restructurings or conversion to
equity. In addition, in the case of provisions, it introduces the concept of discounting long-term provisions. With respect to contingent liabilities, Bulletin C-9 states that
all contingent liabilities that have a probable realization must be accounted for and disclosed in the financial statements; contingent liabilities that have a possible realization must be disclosed,
but not accounted for, in the financial statements; and contingent liabilities that have a remote realization must not be accounted for and are not required to be disclosed in the financial
statements. Bulletin C-9 requires disclosure of committed amounts when they represent significant fixed asset additions, contracted services and goods exceed immediate needs, or the
commitment is considered a contracted obligation. The provisions of Bulletin C-9 became effective beginning January 1, 2003. We are currently evaluating the impact that the adoption
of Bulletin C-9 will have on our consolidated financial statements.

In
December 2001, the MIPA issued Bulletin C-8, "Intangible Assets," which defines intangible assets as costs incurred and rights or privileges acquired that will
generate a future economic benefit. Bulletin C-8 provides a clear definition of research and development costs, requiring that only development costs may be deferred to a future period.
Furthermore, Bulletin C-8 states that pre-operating costs should be expensed as a period cost, unless they could be classified as development costs. Bulletin C-8
requires that goodwill and intangible assets with indefinite

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useful
lives, including previously existing goodwill and intangible assets, should not be amortized, but should be tested for impairment annually. Goodwill and intangible assets with finite useful
lives should be amortized over their useful lives. The provisions of Bulletin C-8 became effective beginning January 1, 2003. We are currently evaluating the impact that the
adoption of Bulletin C-8 will have on our consolidated financial statements.

The
MIPA issued Bulletin C-15, "Impairment and Disposal of Long-Lived Assets," which provides specific criteria for determining when there is an impairment in the
value of long-lived assets for both tangible and intangible assets. Bulletin C-15 establishes a methodology for calculating and recording losses arising from the impairment of
assets and their reversal, and provides guidance for accounting, presentation and disclosure for discontinued operations. The provisions of Bulletin C-15 will be effective as of
January 1, 2004, although early adoption is recommended. We are currently evaluating the impact that the adoption of Bulletin C-15 will have on our consolidated financial
statements.

In
June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 143, "Accounting for Asset Retirement Obligations." SFAS No. 143 requires the
recognition of a liability for the legal obligations associated with the retirement of a tangible long-lived asset that results from the acquisition, construction and/or normal operation
of the asset. The liability is recognized at fair value in the period in which it is incurred if a reasonable estimate of fair value can be made. A corresponding asset retirement cost is added to the
carrying value of the long-lived asset and is depreciated to expense using a systematic and rational method over its useful life. SFAS No. 143 is effective for fiscal years
beginning after June 15, 2002. Upon initial adoption, a liability is recognized for existing asset retirement obligations and the associated asset retirement cost is capitalized as an increase
to the carrying value of the asset. The recognized liability and asset are adjusted for cumulative accretion and accumulated depreciation, respectively, from the time period when the asset retirement
obligation would have originally been recognized had this statement been in effect on the date of initial adoption. The cumulative effect of initial adoption of SFAS No. 143 is recorded as a
change in accounting principle. We are currently evaluating the impact that the adoption of SFAS No. 143 will have on our consolidated financial statements.

In
April 2002, the FASB issued SFAS No. 145, "Rescission of SFAS Nos. 4, 44, and 64, Amendment of SFAS No. 13, and Technical Corrections as of April 2002."
SFAS No. 145 rescinds SFAS No. 4, "Reporting Gains and Losses from Extinguishment of Debt," SFAS No. 44, "Accounting for Intangible Assets of Motor Carriers," and SFAS
No. 64, "Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements." As a result, gains and losses from extinguishment of debt will no longer be classified as extraordinary
items unless they meet the criteria of being unusual or infrequent, as described in APB Opinion No. 30, "Reporting the Results of OperationsReporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions." In addition, SFAS No. 145 amends SFAS No. 13, "Accounting for Leases," to eliminate
an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects similar to
sale-leaseback transactions. SFAS No. 145 also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their
applicability under changed conditions. SFAS No. 145 is effective for fiscal years beginning after May 15, 2002. We are currently evaluating the impact that the adoption of SFAS
No. 145 will have on the consolidated financial statements.

In
June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." The issuance of SFAS No. 146 nullifies the former
guidance provided by the Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." SFAS No. 146 requires the recognition of a liability for costs associated with exit or disposal activity when the
liability is incurred, rather than on the date commitment to an exit or disposal plan. SFAS No. 146 is effective for liabilities related to exit or disposal activities incurred after
December 31, 2002, although earlier application is encouraged. We are currently evaluating the impact that the adoption of SFAS No. 146 will have on our consolidated financial
statements.

In
November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness
of Others (an interpretation of FASB Statements No. 5, 57, and 107 and rescission of Interpretation No. 34)" ("FIN 45"). FIN 45 clarifies the requirements of SFAS No. 5 relating
to a guarantor's accounting for, and disclosure of, the issuance of certain types of guarantees. FIN 45 requires that upon issuance of a guarantee, the guarantor must recognize a liability for the
fair value of the

106

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obligation
it assumes under that guarantee. FIN 45's provisions for initial recognition and measurement should be applied on a prospective basis to guarantees issued or modified after
December 31, 2002 irrespective of the guarantor's fiscal year. The guarantor's previous accounting for guarantees that were issued before the date of FIN 45's initial application may not be
revised or restated to reflect the effect of the recognition and measurement provisions of the interpretation. The disclosure requirements are effective for financial statements of both interim and
annual periods that end after December 15, 2002. We are currently evaluating the impact that the adoption of FIN 45 will have on our consolidated financial statements.

In
January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities, an interpretation of ARB 51" ("FIN 46"). The primary objectives of FIN
46 are to provide guidance on the identification of entities for which control is achieved through means other than through voting rights (variable interest entities or "VIEs") and how to determine
when and which business enterprise should consolidate the VIE (the primary beneficiary). This new model for consolidation applies to an entity which either (1) the equity investors (if any) do
not have a controlling financial interest or (2) the equity investment at risk is insufficient to finance that entity's activities without receiving additional subordinated financial support
from other parties. In addition, FIN 46 requires that both the primary beneficiary and all other enterprises with a significant variable interest in a VIE make additional disclosures. FIN 46 applies
immediately to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains an interest after that date. It applies in the first
fiscal year or interim period beginning after June 15, 2003, to variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. FIN
46 applies to public enterprises as of the beginning of the applicable interim or annual period, and it applies to nonpublic enterprises as of the end of the applicable annual period. We are currently
evaluating the impact that the adoption of FIN 46 will have on our consolidated financial statements.

In
April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." SFAS No. 149 amends and clarifies
financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities
under SFAS No. 133. SFAS No. 149 is effective prospectively for contracts entered into or modified after June 30, 2003 and prospectively for hedging relationships designated after
June 30, 2003. We are currently evaluating the impact the adoption of SFAS No. 149 will have on our consolidated financial statements.

In
May 2003, the FASB issued SFAS No. 150, "Accounting For Certain Financial Instruments with Characteristics of Both Liabilities and Equity." SFAS No. 150 improves
the accounting for certain financial instruments that, under previous guidance, issuers could account for as equity, and requires that these instruments be classified as liabilities in statements of
financial position. SFAS No. 150 is effective prospectively for financial instruments entered into or modified after May 31, 2003 and is otherwise effective at the beginning of the first
interim period beginning after June 15, 2003. SFAS No. 150 shall be implemented by reporting the cumulative effect of a change in an accounting principle for financial instruments
created before the issuance date of the statement and still existing at the beginning of the interim period of adoption. We are currently evaluating the impact the adoption of SFAS No. 150 will
have on our consolidated financial statements.

Change in Independent Auditors

SFP periodically assigns new independent auditors to PEMEX. Mancera, S.C. (A Member Practice of Ernst & Young Global) was 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 SFP, 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, SFP decided to terminate
the engagement of Ruiz, Urquiza y Cía., S.C. for the auditing of 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.

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The independent auditors' reports on the financial statements for the 2000, 2001 and 2002 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 2001 and 2002 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 included in its annual report on Form 20-F for the 2001 fiscal year because its engagement was terminated before those financial statements were completed. 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. SFP made the decision to change
accountants in each of the above instances.

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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.

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 Mr. Vicente Fox Quesada as President of Mexico, we announced that
Mr. Raúl Muñoz Leos 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 5, 2003.

Petróleos Mexicanos  Directors and Executive Officers

|Name                          |  | Position with Petróleos Mexicanos                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | Year Appointed
|----------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------
|Mr. Ernesto Martens Rebolledo |  | Chairman of the Board of Directors of Petróleos Mexicanos and Secretary of the Ministry of Energy
Born: 1933
Business experience: Chairman of the board of directors of Cintra, S.A. de C.V.; Chairman of the board of directors of Aerovías de México, S.A. de C.V.; General Representative of Compañía Mexicana de Aviación, S.A.
de C.V.; and Director General of Vitro, S.A de C.V.
Other board memberships: Comisión Federal de Electricidad (Chairman); Luz y Fuerza del Centro (Chairman); Banco Nacional de Comercio Exterior, S.N.C.; Nacional Financiera, S.N.C.; and Member of the Technical Board of the Comisión
Nacional del Agua |  | 2001          

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Petróleos Mexicanos  Directors and Executive Officers

|Name                                   |  | Position with Petróleos Mexicanos                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  | Year Appointed
|-------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------
|Mr. Fernando de Jesús Canales Clariond |  | Board Member of Petróleos Mexicanos and Secretary of the Ministry of Economy
Born: 1946
Business experience: Governor of Nuevo León; and Assistant Director General of Grupo IMSA
Other board memberships: Banco Nacional de Comercio Exterior, S.N.C.; Banco del Ahorro Nacional y Servicios Financieros, S.N.C.; Centro Nacional de Metrología; Comisión Federal de Electricidad; Comisión Intersecretarial de
Desincorporación; Comisión Intersecretarial de Política Industrial; Comisión Intersecretarial de Gasto-Financiamiento; Comisión Intersecretarial de Precios y Tarifas de los Bienes y Servicios de la
Administración Pública Federal; Comisión Intersecretarial para la Transparencia y el Combate a la Corrupción de la Administración Pública Federal; Fondo para la Micro, Pequeña y Mediana Empresa;
Consejo Nacional de Ciencia y Tecnología; and Nacional Financiera    |  | 2003          
|Mr. Victor Lichtinger Waisman          |  | Board Member of Petróleos Mexicanos and Secretary of the Ministry of the Environment and Natural Resources
Born: 1957
Business experience: Member director of Especialistas Ambientales, S.A. de C.V.; Executive Director of the North American Commission for Environmental Cooperation; and Director of ICF Kaiser Servicios Ambientales
Other board memberships: Comisión Federal de Electricidad                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | 2002          
|Mr. Luis Ernesto Derbez Bautista       |  | Board Member of Petróleos Mexicanos and Secretary of the Ministry of Foreign Affairs
Born: 1947
Business experience: Secretary of the Ministry of Economy; Economic Program Coordinator for President Vicente Fox's Presidential Campaign; Professor at the Instituto Tecnológico de Estudios Superiores de Monterrey; and Independent Consultant
to the World Bank
Other board memberships: Banco de Desarrollo de América del Norte; Banco Nacional de Comercio Exterior, S.N.C.; Comisión de Comercio Exterior; Comisión Intersecretarial para la Transparencia y el Combate a la Corrupción de
la Administración Pública Federal; Comisión Nacional de Inversiones Extranjeras; Comité de Comercio Exterior de Petróleo; Comité Intersecretarial para la Integración del Presupuesto Federal de Ciencia
y Tecnología; Fideicomiso para el Rescate de Precios; and Servicio Postal Mexicano |  | 2001          

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Petróleos Mexicanos  Directors and Executive Officers

|Name                           |  | Position with Petróleos Mexicanos                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  | Year Appointed
|------------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------
|Mr. Pedro Cerisola y Weber     |  | Board Member of Petróleos Mexicanos and Secretary of the Ministry of Communications and Transportation
Born: 1949
Business experience: Advisor to President Vicente Fox; General Coordinator for Vicente Fox's Presidential Campaign; and Regional Director General and Planning Director of Teléfonos de México, S.A. de C.V.
Other board memberships: Aeropuertos y Servicios Auxiliares (Chairman); Caminos y Puentes Federales de Ingresos y Servicios Conexos (Chairman); Telecomunicaciones de México (Chairman); Servicio Postal Mexicano (Chairman); and Banco Nacional de
Obras y Servicios Públicos, S.N.C.                                                                                                                                                                                                                                                                                                                                                      |  | 2001          
|Mr. José Francisco Gil Díaz    |  | Board Member of Petróleos Mexicanos 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
Other board memberships: Banco del Ahorro Nacional y Servicios Financieros, S.N.C. (Chairman); Banco Nacional de Comercio Exterior, S.N.C. (Chairman); Banco Nacional de Crédito Rural, S.N.C. (Chairman); Banco Nacional de Obras y Servicios
Públicos, S.N.C. (Chairman); Casa de Moneda de México (Chairman); Nacional Financiera, S.N.C. (Chairman); Comisión Federal de Electricidad; Comisión Intersecretarial de Gasto Financiamiento (Chairman); Comisión
Intersecretarial de Desincorporación (Chairman); Comisión Nacional Bancaria y de Valores; Comisión Nacional para la Protección y Defensa de los Usuarios de Servicios Financieros (Chairman); and Comisión Nacional de
Seguros y Fianzas |  | 2001          
|Mr. Ramón Hernández Toledo     |  | Board Member of Petróleos Mexicanos and Union Representative
Born: 1937
Business experience: Field Supervisor and other positions in Petróleos Mexicanos                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  | 1992          
|Mr. Pablo Pavón Vinales        |  | Board Member of Petróleos Mexicanos and Union Representative
Born: 1945
Business experience: Other positions in Petróleos Mexicanos                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | 1992          
|Mr. Luis Ricardo Aldana Prieto |  | Board Member of Petróleos Mexicanos; Union Representative; and Senator
Born: 1954
Business experience: Treasury Secretary of the Union; and General Secretary of Section 40 of the Union                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  | 2001          
|Mr. Alejandro Sánchez Narváez  |  | Board Member of Petróleos Mexicanos and Union Representative
Born: 1952
Business experience: Other positions in Petróleos Mexicanos                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | 2001          

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Petróleos Mexicanos  Directors and Executive Officers

|Name                                |  | Position with Petróleos Mexicanos                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | Year Appointed
|----------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------
|Mr. Mario Martínez Aldana           |  | Board Member of Petróleos Mexicanos and Union Representative
Born: 1952
Business experience: Other positions in Petróleos Mexicanos                                                                                                                                                                                                                                                                                                                                             |  | 2001          
|Mr. Raúl Muñoz Leos                 |  | Director General
Born: 1939
Business experience: President and Executive Vice-President of DuPont México, S.A. de C.V.                                                                                                                                                                                                                                                                                                                                                          |  | 2000          
|Mr. Juan José Suárez Coppel         |  | Chief Financial Officer
Born: 1959
Business experience: Chief of Staff of the Secretary of the Ministry of Finance; Corporate Treasury Director of Grupo Televisa; and Director of the Derivatives Trading Desk in Banco Nacional de México S.A.
Other board memberships: Deer Park Refining, L.P.; Mexpetrol, S.A. de C.V.; I.I.I. Servicios, S.A. de C.V.; North America Environmental Fund, L.P.; Mexicana de Lubricantes, S.A. de C.V.; and Instituto Mexicano del Petróleo |  | 2001          
|Ms. Martha Alicia Olvera Rodríguez  |  | Deputy Director of Programming and Budget
Born: 1954
Business experience: Associate Managing Director of Planning and Financial Programming of Petróleos Mexicanos; Associate Managing Director of Budget Control of Petróleos Mexicanos; and Deputy Manager of Programs Integration of
Petróleos Mexicanos                                                                                                                                                                     |  | 2002          
|Mr. Emilio Marco Aguilar            |  | Deputy Director of Investment Projects
Born: 1952
Business experience: Deputy Director of Programming and Budget of Petróleos Mexicanos; Associate Managing Director of Budgeting of Petróleos Mexicanos; Associate Managing Director of Operation and Results Evaluation; and Deputy Manager
of Analysis and Evaluation of Petróleos Mexicanos                                                                                                                                 |  | 2001          
|(Vacant)                            |  | Deputy Director of Financial Information Systems                                                                                                                                                                                                                                                                                                                                                                                                                                |  |               
|Mr. Rigoberto Ariel Yépez García    |  | Deputy Director of Economic Planning
Born: 1965
Business experience: Director General of Prices Policy of the Ministry of Finance and Public Credit; Associate Managing Director of Business Development of Pemex-Gas and Basic Petrochemicals; and Director General of Prices and Rates Policy of the
Ministry of Finance and Public Credit
Other board memberships: Gasoductos de Chihuahua, S. de R.L. de C.V.                                                               |  | 2001          
|Mr. Octavio Javier Ornelas Esquinca |  | Deputy Director of Finance and Treasury
Born: 1954 Business experience: Director of Management and Finance of Brimco, S. de R.L. de C.V.; Corporate Treasurer of Grupo Mina, S.A. de C.V.; and Assistant Director of Technological Updating of Consejo Nacional de Ciencia y
Tecnología                                                                                                                                                                                         |  | 2003          

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Petróleos Mexicanos  Directors and Executive Officers

|Name                             |  | Position with Petróleos Mexicanos                                                                                                                                                                                                                                                                                                                                                                             |  | Year Appointed
|-------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------
|Mr. José Manuel Carrera Panizzo  |  | Deputy Director of Risk Management
Born: 1969
Business experience: Associate Managing Director of Metals, Currencies and Agreements of International Exchanges; and Market Researcher and Broker of Banco de México
Other board memberships: MGI Trading, Ltd. (Vice-President); MGI Enterprises, Ltd. (Vice-President); and MGI Supply (Vice-President)                                                      |  | 2001          
|Mr. Carlos de la Garza Mijares   |  | Corporate Director of Administration
Born: 1944
Business experience: Director General of Hayes Lemmerz Mexico, S.A. de C.V.; Director of the Editorial Board of Periódico Reforma; and Director General and Chairman of Mincer, S.A. de C.V.                                                                                                                                                                  |  | 2003          
|(Vacant)                         |  | Deputy Director of Labor Relations                                                                                                                                                                                                                                                                                                                                                                            |  |               
|Mr. José César Nava Vázquez      |  | General Counsel of Petróleos Mexicanos
Born: 1974
Business experience: Advisor Coordinator of the Ministry of Social Development; Congressman of the LVIII Legislative Period; and Legal Coordinator in the Transition Group of President Vicente Fox                                                                                                                                                         |  | 2001          
|Mr. Víctor Manuel Vázquez Zárate |  | Deputy Director of Medical Services
Born: 1943
Business experience: Associate Managing Director of Medical Services of Petróleos Mexicanos; Deputy Manager of Administrative Technical Support of Petróleos Mexicanos; and Medical Advisor of the Corporate Services Management of
Petróleos Mexicanos                                                                                                        |  | 2000          
|Mr. Rafael Fernández de la Garza |  | Corporate Director of Industrial Safety and Environmental Protection
Born: 1948
Business experience: Director of the Nucleoelectrical Project of Laguna Verde; Associate Managing Director of Engineering of the Carboelectric Central Facility of Río Escondido; and Associate Managing Director of Projects of Instituto de
Investigaciones Eléctricas                                                      |  | 1997          
|Mr. Pedro Silva López            |  | Deputy Director of Operations Coordination
Born: 1953
Business experience: Executive Director of Strategic Gas Program; Associate Managing Director of Strategic Planning of Pemex-Exploration and Production; Associate Managing Director of the Burgos Integral Project of Pemex-Exploration and Production;
and Associate Managing Director of Planning (North Region) of Pemex-Exploration and Production |  | 2003          
|Mr. Roberto Osegueda Villaseñor  |  | Corporate Director for Strategic Planning
Born: 1938
Business experience: Director General of OMV Ingeniería Comercial, S.A. de C.V.; Director of Chemical and Petrochemical Division of Fomento Industrial Somex, S.A. de C.V.; and Associate Managing Director of Crude Oil Exportation of
Petróleos Mexicanos
Board memberships: Asociación Veracruzana, S.A. de C.V. (Vice President)                     |  | 2001          

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Petróleos Mexicanos  Directors and Executive Officers

|Name                                  |  | Position with Petróleos Mexicanos                                                                                                                                                                                                                                                                                                       |  | Year Appointed
|------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------
|Mr. Eliut González Salinas            |  | Deputy Director of Sector Relations
Born: 1951
Business experience: Associate Managing Director of Evaluation and Information of Petróleos Mexicanos; Deputy Manager of Information Petróleos Mexicanos; and General Superintendent of Information to the Public Sector of Petróleos
Mexicanos                                          |  | 2002          
|Mr. Pedro Carlos Gómez Flores         |  | Deputy Director of Organization Development
Born: 1951
Business experience: Deputy Director of Sector Relations of Petróleos Mexicanos; Deputy Director of Strategic Planning of Petróleos Mexicanos; and Deputy Director of Distribution of Pemex-Refining                                                                             |  | 2001          
|Mr. José Antonio Ceballos Soberanis   |  | Corporate Director of Operations
Born: 1943
Business experience: Director General of Pemex-Exploration and Production; Deputy Director of Trading of Pemex-Refining; and Executive Coordinator of Internal Trade                                                                                                                        |  | 2001          
|(Vacant)                              |  | Deputy Director of Patrimonial Management                                                                                                                                                                                                                                                                                               |  |               
|(Vacant)                              |  | Deputy Director of Corporate Services                                                                                                                                                                                                                                                                                                   |  |               
|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 Industrias Resistol, S.A.                                                                                  |  | 2001          
|Mr. Sergio F. Cruz Carranza           |  | Deputy of Strategic Planning
Born: 1942
Business experience: Director General of Corporación Industrial Portuaria, S.A. de C.V.; Associate Managing Director of Special Projects of Petróleos Mexicanos; and Deputy Manager of Infrastructure Coordination of Petróleos
Mexicanos                                                       |  | 2001          
|Mr. Andrés Antonio Moreno y Fernández |  | Corporate Director of Engineering and Project Development
Born: 1938
Business experience: President of Mofal Consultores, S.C.; Deputy Director of Construction of the Comisión Federal de Electricidad; and Director General of Lumbreras y Túneles, S.A. de C.V.                                                                      |  | 2001          
|Mr. Ernesto Ríos Montero              |  | Deputy Director of Engineering
Born: 1936
Business experience: Director of Consultoría Empresarial Ejecutiva; Executive Vice President of Grupo Bufete Industrial; and Plant Manager of Síntesis Orgánicas, S.A.
Other board memberships: Instituto Mexicano del Petróleo                                                               |  | 2001          
|Mr. Enrique Bazúa Rueda               |  | Deputy Director of Technological Development
Born: 1946
Business experience: Director of the Chemistry Faculty of the Universidad Nacional Autónoma de México; Research and Planning Coordinator of the Instituto Mexicano del Petróleo; and General Coordinator of Postgraduate Studies of
the Universidad Nacional Autónoma de México |  | 2001          

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Petróleos Mexicanos  Directors and Executive Officers

|Name                                |  | Position with Petróleos Mexicanos                                                                                                                                                                                                                                                                                                                                                                             |  | Year Appointed
|----------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------
|Mr. Jorge Alberto Aguilar López     |  | Deputy Director of Contracting
Born: 1956
Business experience: Project Director of Grupo México; Manager of Financial Planning of the Comisión Federal de Electricidad; and Private Consultant                                                                                                                                                                                                                |  | 2001          
|Mr. Renato Valle Favela             |  | Deputy Director of Industrial Plants Projects
Born: 1946
Business experience: Advisor of Design, Construction, Supervision and Mounting of Electromechanical Equipment of Hydraulic Works in the Comisión Nacional del Agua; and Manager of Thermolectrical Construction Projects of the Comisión
Federal de Electricidad                                                                                     |  | 2001          
|Mr. Javier Pérez Saavedra           |  | Deputy Director of Quality Control
Born: 1945
Business experience: Director General of Pérez Saavedra y Asociados Consultores, S.A. de C.V.; Advisor to the Comisión Nacional del Agua; and Deputy Director of Administration of the Comisión Nacional del Agua
Other Board memberships: Pérez Saavedra y Asociados Consultores, S.A. de C.V. (Chairman); and Desarrollo de Negocios Prendarios, S.A. de C.V. |  | 2001          
|Mr. Guillermo Ruiz Gutiérrez        |  | Deputy Director of Operation Evaluation
Born: 1959
Business experience: Associate Managing Director; Manager; and Superintendent of Petróleos Mexicanos                                                                                                                                                                                                                                                       |  | 2001          
|Mr. Reynaldo Jáuregui Zentella      |  | Deputy Director of Alliances and New Business
Born: 1940
Business experience: Director of New Projects of Pargo; Associate Managing Director of Information and Public Relations of Petróleos Mexicanos; and Personal Secretary to the Director General of Petróleos Mexicanos                                                                                                                                |  | 2001          
|Mr. José Gastón Pavlovich Rodríguez |  | Deputy Director of Cultural Transformation
Born: 1968
Business experience: Liaison Director of Union de Empresarios para la Tecnología en la Educación, A.C.; Professional Development Director of Universidad Anáhuac; and Entrepreneurial Promotion Director of Generación
Empresarial Mexicana, S.C.                                                                                                       |  | 2002          
|(Vacant)                            |  | Head of the Internal Control Body                                                                                                                                                                                                                                                                                                                                                                             |  |               
|Mr. Federico Domínguez Zuloaga      |  | Head of Liabilities Area and Head of Complaints Area
Born: 1959
Business experience: Deputy Administrator of Coercive Collection of the Ministry of Finance and Public Credit; Independent Advisor; and Chief of Loan Services for the Fondo para la Vivienda del Instituto de Seguridad y Servicios Sociales de los
Trabajadores del Estado                                                                  |  | 2001          
|Mr. Gustavo Rovirosa Renero         |  | Head of Control and Evaluation Auditing
Born: 1939
Business experience: Deputy Director of Assets Streamlining; Advisor to the Director General of Aseguradora Hidalgo, S.A.; and Director of Administrative Services of Aseguradora Hidalgo, S.A.                                                                                                                                                            |  | 2001          

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Petróleos Mexicanos  Directors and Executive Officers

|Name                              |  | Position with Petróleos Mexicanos                                                                                                                                                                                                                                                                                                                                                                       |  | Year Appointed
|--------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------
|Mr. Manuel Vázquez Bustillos      |  | Head of the Auditing Area
Born: 1939
Business experience: Associate Managing Director of Supervision of Entities and Affiliates of Petróleos Mexicanos; General Comptroller of the Ministry of Energy; General Comptroller of the Instituto de Seguridad y Servicios Sociales de los
Trabajadores del Estado; and Director General and President of Laboratorios Ingon, S.A.                            |  | 1997          
|Mr. J. Salvador Gómez Ávila       |  | Corporate Auditor of Environmental Protection
Born: 1943
Business experience: Deputy Director of Planning of Pemex-Petrochemicals; Associate Managing Director of Strategic Planning of Pemex-Petrochemicals; and Deputy Manager of Industrial Planning of Petróleos Mexicanos                                                                                                                          |  | 1998          
|Mr. Jorge Andrés Ocejo Moreno     |  | Advisor Coordinator of the Director General
Born: 1943
Business experience: Advisor Coordinator of the Secretary of Labor and Social Foresight; Secretary General of the National Executive Committee of Partido Acción Nacional; and Liaisons Secretary of the National Executive Committee of Partido
Acción Nacional
Other Board memberships: Colegio de Alta Dirección de Empresas, A.C. (Chairman) |  | 2003          
|Mr. Melchor de los Santos Ordóñez |  | Executive Coordinator to the Director General
Born: 1950
Business experience: Senator in the Mexican Congress; Director of Delegations of Banco Nacional de Obras y Servicios Públicos, S.N.C.; and Head of Universidad Autónoma de Coahuila                                                                                                                                                            |  | 2001          
|Mr. Moisés Ithuriel Orozco García |  | Executive Advisor to the Director General
Born: 1968
Business experience: Associate Managing Director of Strategic Planning of Petróleos Mexicanos; Executive Advisor Coordinator of Pemex-Petrochemicals; and General Director of Special Projects of the Ministry of Energy                                                                                                                           |  | 2001          
|Mr. Raoul Capdevielle Orozco      |  | Technical Secretary of the Director General
Born: 1943
Business experience: Deputy Comptroller of Liabilities; Legal Coordinator of Instalaciones Inmobiliarias para Industrias, S.A.; and Legal Director of Franchises in Triturados Basálticos y Derivados, S.A. de C.V.                                                                                                                              |  | 2001          

Pemex-Exploration and Production  Directors and Executive Officers

|Name                        |  | Position with Pemex-Exploration and Production                                                 |  | Year Appointed
|--------------------------- |  | ---------------------------------------------------------------------------------------------- |  | --------------
|Mr. Raúl Muñoz Leos         |  | Chairman of the Board of Pemex-Exploration and Production (refer to Petróleos Mexicanos)       |  | 2000          
|Mr. Juan Bueno Torio        |  | Board Member of Pemex-Exploration and Production (refer to Pemex-Refining)                     |  | 2003          
|Mr. Marcos Ramírez Silva    |  | Board Member of Pemex-Exploration and Production (refer to Pemex-Gas and Basic Petrochemicals) |  | 1996          
|Mr. Rafael Beverido Lomelín |  | Board Member of Pemex-Exploration and Production (refer to Pemex-Petrochemicals)               |  | 2001          

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Pemex-Exploration and Production  Directors and Executive Officers

|Name                                |  | Position with Pemex-Exploration and Production                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  | Year Appointed
|----------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------
|Mr. Juan José Suárez Coppel         |  | Board Member of Pemex-Exploration and Production (refer to Petróleos Mexicanos)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | 2002          
|Mr. Carlos Hurtado López            |  | Board Member of Pemex-Exploration and Production and Undersecretary of Disbursements of the Ministry of Finance and Public Credit
Born: 1955
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 to the Organization for Economic Cooperation and Development
(OECD)
Other board memberships: Aeropuertos y Servicios Auxiliares; Ferrocarriles Nacionales de México; Comisión Federal de Electricidad; and Luz y Fuerza del Centro              |  | 2001          
|Mr. Juan Antonio Bargés Mestres     |  | Board Member of Pemex-Exploration and Production and Undersecretary of Hydrocarbons of the Ministry of Energy
Born: 1945
Business experience: Director of Planning and Director General of Aeronaútica Civil
Other board memberships: Banco Nacional de Comercio Exterior, S.N.C.; and Nacional Financiera, S.N.C.                                                                                                                                                                                                                                                                      |  | 2001          
|Mr. Salvador Rubén Ortiz Vértiz     |  | Board Member of Pemex-Exploration and Production and General Coordinator of Mining of the Ministry of Economy
Born: 1949
Business experience: Assistant Director and Deputy Director of Sectorial Studies for Grupo Financiero Banamex-Accival; Senior Advisor to the Energy Sector and Basic Industries for Banco Nacional de México, S.A.; and Advisor of the Crude Oil
Sector for Banco Nacional de México, S.A.
Other board memberships: Consejo de Recursos Minerales; Fideicomiso de Fomento Minero; Exportadora de la Sal, S.A. de C.V.; and Transportadora de Sal, S.A. de C.V. |  | 2002          
|Mr. Luis Ramírez Corzo y Hernández. |  | Director General
Born: 1948
Business experience: Director General of Turbinas Solar, S.A. de C.V.
Other board memberships: Desarrollos Inmobiliarios CUGA, S.A. de C.V. (Chairman)                                                                                                                                                                                                                                                                                                                                                                                                      |  | 2001          
|Mr. Federico Martínez Salas         |  | Deputy Director of Engineering and Strategic Works Development
Born: 1943
Business experience: Executive Director of Cantarell Project; Deputy Director of Primary Production Projects of Petróleos Mexicanos; and Board Member of Gutsa Constructores, S.A. de C.V.                                                                                                                                                                                                                                                                                                                    |  | 2001          

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Pemex-Exploration and Production  Directors and Executive Officers

|Name                                |  | Position with Pemex-Exploration and Production                                                                                                                                                                                                                                                                                                                                                               |  | Year Appointed
|----------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------
|Mr. J. Javier Hinojosa Puebla       |  | Deputy Director (Northeast Marine Region)
Born: 1958
Business experience: Coordinator of the Executive Commercial Operative Coordination; Associate Managing Director of Analysis and Investment Evaluation in Exploration; Associate Managing Director of Technical Operative Coordination (South Region); and
Associate Managing Director of Production (South Region) of Pemex-Exploration and Production |  | 2003          
|Mr. Alfredo Eduardo Guzmán Baldizán |  | Deputy Director (North Region)
Born: 1947
Business experience: Executive Coordinator of Exploration Strategies, Associate Managing Director of Planning (North Region), and Associate Managing Director of Exploration (North Region), of Pemex-Exploration and Production                                                                                                                                   |  | 2003          
|Mr. José Tomás Limón Hernández      |  | Deputy Director of Operations and Trade
Born: 1943
Business Experience: Deputy Director of Operations Coordination; Associate Managing Director of the Cantarell Project; Director of the Cantarell Project; and Administrator of Activo Cantarell                                                                                                                                                           |  | 2003          
|Mr. Rogelio Bartolomé Morando Sedas |  | Deputy Director of Industrial Safety and Environmental Protection Auditing
Born: 1946
Business Experience: Director General of Industrias Tecnos S.A. de C.V.; Plant Manager of Dupont S.A. de C.V.; Associate Managing Director of Industrial Safety and Environmental Protection of DuPont, S.A. de C.V.; and Chief of Ethylation Plant at
Tetraetilo de México, S.A.                                      |  | 2003          
|Mr. Heberto Ramos Rodríguez         |  | Deputy Director (South Region)
Born: 1951
Business experience: Associate Managing Director of Planning (South Region), Associate Managing Director of Drilling and Well Maintenance (South Region), and Associate Managing Director of the Marine Drilling Project of Pemex-Exploration and
Production.                                                                                                      |  | 2003          
|Mr. Héctor Leyva Torres             |  | Deputy Director of Marine Services Coordination
Born: 1948
Business experience: Deputy Director (Southwest Marine Region), Associate Managing Director of Production (Marine Region), Associate Managing Director of Production (South Region) and Deputy Director (South Region) of Pemex-Exploration and
Production
Board memberships: Administración Portuaria Integral de Dos Bocas, Tabasco             |  | 2003          
|Mr. Rafael J. Bracho Ransom         |  | Deputy Director of Management and Finance
Born: 1947
Business experience: Director of Instalaciones Inmobiliarias para Industrias, S.A. de C.V.; and Deputy Director of Finance of Petróleos Mexicanos                                                                                                                                                                                                       |  | 2002          

118

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Pemex-Exploration and Production  Directors and Executive Officers

|Name                                   |  | Position with Pemex-Exploration and Production                                                                                                                                                                                                                                                                                                                                                           |  | Year Appointed
|-------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------
|Mr. Pedro Javier Caudillo Márquez      |  | Deputy Director of Drilling and Well Maintenance
Born: 1945
Business experience: Chief of Non-Conventional Drilling, Deputy Manager of Drilling, and Intern Associate Managing Director of Drilling and Well Maintenance of Pemex-Exploration and Production                                                                                                                                             |  | 2003          
|Mr. Luis Sergio Guaso Montoya          |  | Executive Director of the Multiple Services Contracts Models
Born: 1963
Business Experience: Economic Analysis Manager (Multiple Services Contracts) and Manager of Investment Resources of Pemex-Exploration and Production; Economic Advisor for PMI; Pricing Manager and Advisor to the Chief Financial Executive Office in
Petróleos Mexicanos                                                       |  | 2002          
|Mr. Carlos A. Morales Gil              |  | Deputy Director of Planning and Evaluation
Born: 1954
Business experience: Deputy Director (South Region), 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                                                    |  | 2001          
|Mr. Francisco Javier Barraza Rodríguez |  | Deputy Director of Technology Information Coordination
Born: 1943
Business experience: Technical Support on Documental Technology of Imaxserve; Director of Administrative Systems of Scotiabank Inverlat; and External Consultant on Administrative Systems of Banco Nacional de México, S.A.                                                                                                           |  | 2003          
|Mr. Ricardo Palomo Martínez            |  | Deputy Director (Southwest Marine Region)
Born: 1954
Business experience: Various positions within Petróleos Mexicanos                                                                                                                                                                                                                                                                                   |  | 2003          
|Mr. Héber Cinco Ley                    |  | Deputy Director of Technical Coordination of Exploitation
Born: 1946
Business Experience: Director General of Asesoría y Servicios Petroleros and Technical Advisor of the Deputy Direction of Primary Production of Pemex-Exploration and Production; and Oil Field Engineer of Standard Oil Company                                                                                                    |  | 2003          
|Mr. Adán Ernesto Oviedo Pérez          |  | Deputy Director of Technical Coordination of Exploration
Born: 1956
Business Experience: Associate Managing Director of Diagnosis and Risk Analysis of Pemex-Exploration and Production; Manager of Salina del Istmo Exploration Asset, and Chief of the Marbella Project of Pemex-Exploration and Production
Other board memberships: Compañía Mexicana de Exploraciones, S.A. de C.V. (Vice President) |  | 2003          
|(Vacant)                               |  | Head of the Internal Control Body                                                                                                                                                                                                                                                                                                                                                                        |  |               

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Pemex-Exploration and Production  Directors and Executive Officers

|Name                         |  | Position with Pemex-Exploration and Production                                                                                                                                                                                                                                                                                                                                          |  | Year Appointed
|---------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------
|Mr. Teódulo Gutiérrez Acosta |  | Deputy Director of Human Resources, Competitiveness and Innovation
Born: 1944
Business Experience: Associate Managing Director of Professional Development of Pemex-Exploration and Production; Chief of the Crude Oil Exploitation Department at Universidad Nacional Autónoma de México; and Associate Managing Director
of Production Technology of Pemex-Exploration and Production |  | 2003          

Pemex-Refining  Directors and Executive Officers

|Name                                  |  | Position with Pemex-Refining                                                                                                                                                                                                                                                                                          |  | Year Appointed
|------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------
|Mr. Raúl Muñoz Leos                   |  | Chairman of the Board of Pemex-Refining (refer to Petróleos Mexicanos)                                                                                                                                                                                                                                                |  | 2000          
|Mr. Luis Ramírez Corzo y Hernández    |  | Board Member of Pemex-Refining (refer to Pemex-Exploration and Production)                                                                                                                                                                                                                                            |  | 2001          
|Mr. Marcos Ramírez Silva              |  | Board Member of Pemex-Refining (refer to Pemex-Gas and Basic Petrochemicals)                                                                                                                                                                                                                                          |  | 1996          
|Mr. Rafael Beverido Lomelín           |  | Board Member of Pemex-Refining (refer to Pemex Petrochemicals)                                                                                                                                                                                                                                                        |  | 2001          
|Mr. Carlos Hurtado López              |  | Board Member of Pemex-Refining (refer to Pemex-Exploration and Production)                                                                                                                                                                                                                                            |  | 2001          
|Mr. Juan Antonio Bargés Mestres       |  | Board Member of Pemex-Refining (refer to Pemex-Exploration and Production)                                                                                                                                                                                                                                            |  | 2001          
|Mr. Andrés Antonio Moreno y Fernández |  | Board Member of Pemex-Refining (refer to Petróleos Mexicanos)                                                                                                                                                                                                                                                         |  | 2002          
|Mr. Juan Bueno Torio                  |  | Director General
Born: 1953
Business experience: Undersecretary for Small and Medium Enterprise of the Ministry of Economy; Coordinator of the Energy Sector in the Transition Group of President Vicente Fox; Congressman in Veracruz; and Director General of Cafés
Isabel                                          |  | 2003          
|Mr. Alberto Ezequiel Alcaraz Granados |  | Deputy Director of Production
Born: 1952
Business experience: Associate Managing Director of Production Control; Associate Managing Director of Refinería General Lazaro Cárdenas; and Associate Managing Director of Refinería Ing. Antonio M. Amor                                                                  |  | 2002          
|Mr. Enrique Samuel López Albarrán     |  | Deputy Director of Trading
Born: 1951
Business experience: Senior Vice President for Latin America of Reichhold Chemical Inc., Executive Vice President of Reichhold Chemical Inc.; and Director General of Reichhold Química de México S.A. de C.V.
Other board memberships: Growth Enterprise Team, S.C. (Chairman) |  | 2001          

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Pemex-RefiningDirectors and Executive Officers

|Name                                         |  | Position with Pemex-Refining                                                                                                                                                                                                                                                                                                                                                                                                                                                |  | Year Appointed
|-------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------
|Mr. Cutberto O. Azuara Pavón                 |  | Deputy Director of Storage and Distribution
Born: 1947
Business experience: Associate Managing Director of Pipelines Transportation and Deputy Manager of Technical Evaluation of Refineries of Pemex Refining; and Commercial Representative and President of PMI Services North America, Inc.                                                                                                                                                                             |  | 2001          
|Mr. José Antonio Gómez Urquiza de la Macorra |  | Deputy Director of Management and Finance
Born: 1951
Business experience: Director General of Cámara Nacional de la Industria del Hierro y el Acero; Deputy Delegate of Management of Delegación Benito Juárez; and Director General of Trichem de México, S.A. de C.V.                                                                                                                                                                                                     |  | 2003          
|Mr. Manuel Betancourt García                 |  | Deputy Director of Planning, Coordination and Evaluation
Born: 1947
Business experience: Director General of Industrial Development of Hydrocarbons of the Ministry of Energy; Director General of Policy and Energy Development of the Ministry of Energy; and Advisor Coordinator of the General Accountant of the Ministry
of Commerce and Industrial Development                                                                                                        |  | 2003          
|(Vacant)                                     |  | Head of the Internal Control Body                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |               
|Mr. Juan Daniel Gómez Bilbao                 |  | Auditor of Industrial Safety and Environmental Protection
Born: 1948
Business experience: Associate Managing Director of Evaluation of the Corporate General Comptroller of Petróleos Mexicanos; Deputy Director of Training and Technical Services of Instituto Mexicano del Petróleo; Deputy Director of
Research and Industrial Transformation of Instituto Mexicano del Petróleo; and Deputy Director of Refining and Petrochemicals of Instituto Mexicano del Petróleo |  | 2001          

Pemex-Gas and Basic Petrochemicals  Directors and Executive Officers

|Name                               |  | Position with Pemex-Gas and Basic Petrochemicals                                               |  | Year Appointed
|---------------------------------- |  | ---------------------------------------------------------------------------------------------- |  | --------------
|Mr. Raúl Muñoz Leos                |  | Chairman of the Board of Pemex-Gas and Basic Petrochemicals (refer to Petróleos Mexicanos)     |  | 2000          
|Mr. Luis Ramírez Corzo y Hernández |  | Board Member of Pemex-Gas and Basic Petrochemicals (refer to Pemex-Exploration and Production) |  | 2001          
|Mr. Juan Bueno Torio               |  | Board Member of Pemex-Gas and Basic Petrochemicals (refer to Pemex-Refining)                   |  | 2001          
|Mr. Rafael Beverido Lomelín        |  | Board Member of Pemex-Gas and Basic Petrochemicals (refer to Pemex Petrochemicals)             |  | 2001          
|Mr. Carlos Hurtado López           |  | Board Member of Pemex-Gas and Basic Petrochemicals (refer to Pemex-Exploration and Production) |  | 2001          
|Mr. Juan Antonio Bargés Mestres    |  | Board Member of Pemex-Gas and Basic Petrochemicals (refer to Pemex-Exploration and Production) |  | 2001          
|Mr. Juan José Súarez Coppel        |  | Board Member of Pemex-Gas and Basic Petrochemicals (refer to Petróleos Mexicanos)              |  | 2002          

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Pemex-Gas and Basic PetrochemicalsDirectors and Executive Officers

|Name                               |  | Position with Pemex-Gas and Basic Petrochemicals                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | Year Appointed
|---------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------
|Ms. María de Lourdes Dieck Assad   |  | Board Member of Pemex-Gas and Basic Petrochemicals and Undersecretary of Economic Liaisons and International Cooperation of the Ministry of Foreign Affairs
Born: 1954
Business experience: Advisors Coordinator of the Secretary of Economy; Director of the Ph.D. Program of the Graduate School of Business at Instituto Tecnológico de Estudios Superiores de Monterrey; Professor and Researcher in Economics at
Instituto Tecnológico de Estudios Superiores de Monterrey; and Professor and Chair of the Economics Department at Trinity College |  | 2003          
|Mr. Marcos Ramírez Silva           |  | Director General
Born: 1957
Business experience: Deputy Director of Liquefied Gas and Basic Petrochemicals of Pemex-Gas and Basic Petrochemicals; Deputy Director of Planning and Operative Control of Pemex-Gas and Basic Petrochemicals; and Commercial Director of Petroleum and
Petrochemical Products of P.M.I. Comercio Internacional, S.A. de C.V.                                                                                                                                                                                               |  | 1996          
|Mr. Roberto Ramírez Soberón        |  | Deputy Director of Planning
Born: 1950
Business experience: Commercial Associate Managing Director, Associate Managing Director of Urban Distribution, Associate Managing Director of Control and Measuring and Associate Managing Director of Liquefied Gas Trading of Pemex-Gas and Basic
Petrochemicals                                                                                                                                                                                                                                              |  | 1997          
|Mr. Salvador García-Luna Rodríguez |  | Deputy Director of Liquefied Gas and Basic Petrochemicals
Born: 1959
Business experience: Commercial Director of Crude Oil of P.M.I. Comercio Internacional, S.A. de C.V.; Commercial Associate Managing Director of Petroleum Products of P.M.I. Comercio Internacional, S.A. de C.V.; and Deputy Manager of Residuals of PMI
Comercio Internacional, S.A. de C.V.                                                                                                                                                                                     |  | 1996          
|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. Holdings North America, Inc.                                                                                                                                                                                                                                                                                                                   |  | 1996          
|Mr. Claudio Trulín Espinosa        |  | Deputy Director of Management and Finance
Born: 1945
Business experience: Associate Managing Director of Internal Management and Corporate Support of Petróleos Mexicanos; Major Officer of the Ministry of Public Security; Director of Support Services of the Ministry of Public Security of the
Federal District; and Technical Secretary of Industrial Safety and Environmental Protection Auditing of Petróleos Mexicanos                                                                                                                         |  | 2001          

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Pemex-Gas and Basic PetrochemicalsDirectors and Executive Officers

|Name                          |  | Position with Pemex-Gas and Basic Petrochemicals                                                                                                                                                                                                                           |  | Year Appointed
|----------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------
|Mr. Armando R. Arenas Briones |  | Deputy Director of Production
Born: 1948
Business experience: Various positions in Petróleos Mexicanos                                                                                                                                                                     |  | 1996          
|Mr. Claudio F. Urencio Castro |  | Deputy Director of Pipelines
Born: 1949
Business experience: Director General of Programming and Budget of the Federal District Department; Undertreasurer of Taxation Management of the Federal District Department; and Director of Economic Research of Bancomer S.N.C. |  | 1996          
|Mr. Andrés Alvarez Kuri       |  | Head of the Internal Control Body
Born: 1962
Business experience: General Manager of Isla Caribe Rent, S.A. de C.V.; Auditing Coordinator of Instituto Mexicano del Seguro Social; and Control and Evaluation Coordinator of Instituto Mexicano del Seguro Social          |  | 2001          

Pemex- PetrochemicalsDirectors and Executive Officers

|Name                                  |  | Position with Pemex-Petrochemicals                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | Year Appointed
|------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------
|Mr. Raúl Muñoz Leos                   |  | Chairman of the Board of Pemex-Petrochemicals (refer to Petróleos Mexicanos)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | 2000          
|Mr. Luis Ramírez Corzo y Hernández    |  | Board Member of Pemex-Petrochemicals (refer to Pemex-Exploration and Production)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | 2001          
|Mr. Juan Bueno Torio                  |  | Board Member of Pemex-Petrochemicals (refer to Pemex-Refining)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | 2001          
|Mr. Marcos Ramírez Silva              |  | Board Member of Pemex-Petrochemicals (refer to Pemex-Gas and Basic Petrochemicals)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | 1996          
|Mr. Carlos Hurtado López              |  | Board Member of Pemex-Petrochemicals (refer to Pemex-Exploration and Production)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | 2001          
|Mr. Juan Antonio Bargés Mestres       |  | Board Member of Pemex-Petrochemicals (refer to Pemex-Exploration and Production)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | 2001          
|Mr. Andrés Antonio Moreno y Fernández |  | Board Member of Pemex-Petrochemicals (refer to Petróleos Mexicanos)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  | 2002          
|Mr. Juan Antonio García Villa         |  | Board Member of Pemex-Petrochemicals and Undersecretary of Foreign Investment and International Trade Practices of the Ministry of Economy
Born: 1945
Business experience: Senator and Representative in the Mexican Congress
Other board memberships: Luz y Fuerza del Centro; Centro de Investigación en Química Aplicada; Fondo de Información y Documentación para la Industria; Corporación Mexicana de Investigación en Materiales;
Centro de Investigación y Desarrollo Tecnológico en Electroquímica; Fondo de Investigación y Desarrollo para la Modernización Tecnológica; Centro de Ingeniería y Desarrollo Industrial; Fondo para el
Fortalecimiento de las Capacidades Científicas y Tecnológicas; Comisión Federal de Electricidad; Comisión Nacional de Normalización; and Coordinación de la Inversión Pública Federal |  | 2003          

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Pemex- PetrochemicalsDirectors and Executive Officers

|Name                                  |  | Position with Pemex-Petrochemicals                                                                                                                                                                                                                                                                    |  | Year Appointed
|------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------
|Mr. Rafael Beverido Lomelín           |  | Director General
Born: 1942
Business experience: Director General and other positions in Industrias Negromex, S.A. de C.V.                                                                                                                                                                            |  | 2001          
|Mr. Lorenzo Aldeco Ramírez            |  | Deputy Director of Operations
Born: 1955
Business experience: Associate Managing Director of Operations of Servicios de Operaciones de Nitrógeno, S.A. de C.V.; Plant Manager of Industrias Negromex, S.A. de C.V.; and Associate Managing Director of Purchases of Industrias Negromex,
S.A. de C.V. |  | 2001          
|Mr. Abraham Klip Moshinsky            |  | Deputy Director of Planning
Born: 1956
Business Experience: Director General and Partner of Blindajes Automundo, S.A. de C.V.; Assistant Director of Carrocerías y Adaptaciones Automotrices, S.A. de C.V.; and Director of Operations of Industrias Negromex, S.A. de C.V.                           |  | 2002          
|Mr. Mario Hugo González Petrikowsky   |  | Deputy Director of Management and Finance
Born: 1937
Business experience: Associate Managing Director of Budgeting; Advisor to the Deputy Direction of Programming and Budgeting; and Deputy Director of Planning of Pemex-Petrochemicals                                                             |  | 2001          
|Mr. Carlos Pani Espinosa              |  | Deputy Director of Trading
Born: 1947
Business experience: Business consultant; Director General of Troy Industrias, S.A. de C.V.; and several positions in Grupo Desc.                                                                                                                               |  | 2001          
|Mr. Felipe de Jesús Barragán Alvídrez |  | Head of the Internal Control Body
Born: 1950
Business experience: Head of the Internal Control Body of Petroquímica Morelos, S.A. de C.V.; Head of the Internal Control Body of Petroquímica Escolín, S.A. de C.V.; and Deputy Comptroller of Pemex-Petrochemicals                                    |  | 2003          

Compensation of Directors and Officers

For the year ended December 31, 2002, the aggregate compensation of executive officers of Petróleos Mexicanos and the subsidiary entities
(77 persons) paid or accrued in that year for services in all capacities was approximately Ps. 233 million. Members of the boards of directors of Petróleos Mexicanos and the
subsidiary entities 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 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.

Compliance with the Sarbanes-Oxley Act

As a foreign registrant, we are subject to certain provisions of the Sarbanes-Oxley Act of 2002. We are currently assessing these provisions in order to comply
with them. Although some provisions of the Sarbanes-Oxley Act do not apply to us, given that our securities are not listed on any U.S. stock exchanges we are considering

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implementation
of these requirements because we acknowledge that they promote better corporate governance practices.

We
are currently evaluating the provisions of the Sarbanes-Oxley Act and specific rules issued by the SEC related to audit committees and their functions. We intend to establish an audit
committee, and to this end, we are currently establishing this committee's composition, its rules of operation and the specific functions it would perform. Our disclosure of internal controls has been
implemented (see Item 16) and other required disclosures are in the process of implementation, in order to comply with the certifications required from foreign issuers in future years. In
addition, we are currently evaluating the implementation of the Sarbanes-Oxley requirements relating to a code of ethics. As discussed below in "Item 8Financial
InformationLegal ProceedingsMexican Government Audits and Other Investigations", all of our employees are currently subject to the Código de Etica de los Servidores Públicos de la
Administración Pública Federal(the Code of
Ethics for Federal Public Officials of the Federal Public Administration), which was issued by SFP in July 2002 pursuant to the requirements of theLey Federal de
Responsabilidades Administrativas de los Servidores Públicos(Federal Law of Administrative Responsibilities of Public Officials) in order to establish clear
rules to promote and enforce legal and ethical standards of conduct and to prevent corruption and corporate abuses by Mexican public officials.

Employees

Excluding employees of the PMI Group and including those employed by PEMEX on a temporary basis, at December 31, 2002, Petróleos Mexicanos
and the subsidiary entities had 137,134 employees, as compared with 134,852 at December 31, 2001. During 2002, Petróleos Mexicanos and the subsidiary entities employed an average
of 553 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                     |       | 49,908          |         | 48,939
|Pemex-Exploration and Production   |       | 36,503          |         | 43,417
|Pemex-Petrochemicals               |       | 13,245          |         | 13,900
|Pemex-Gas and Basic Petrochemicals |       | 10,678          |         | 10,690
|Petróleos Mexicanos                |       | 16,364          |         | 15,550
|                                   |       |                 |         |       
|                                   | Total |                 | 126,698 |       
|                                   |       |                 |         |       
|PMI Group                          |       | 289             |         | 289   

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The Union represents approximately 79.20% 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 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, last year, SFP (the Comptroller General's
office) 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 5.5% in 2002 and
8.5% in 2001, 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, 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 paid
this increase in wages and benefits to its workers, including retirees in accordance with the collective bargaining agreement, retroactively to August 1, 2002.

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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. 10,266 million in 2002 and Ps. 4,100 million in 2001.

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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 Energy of Mexico is the Chairman of the Board. The General Comptroller's Office of the Mexican Government (SFP) appoints PEMEX's external auditors and the Director
General of Petróleos Mexicanos is a member of the President of Mexico's cabinet. 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 Officials), 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 officials or the persons referred above are or have been members of."

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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 SFP conducted an audit of PEMEX's operations in 2000 and previous years. In the audit, SFP
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, SFP 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 Ps. 1,580 million in federal monies from PEMEX to the Union from
March 2000 to October 2000. SFP 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 million previously identified by SFP 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 2001 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 plans, however, 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
currently set for August 18, 2003.

On
September 10, 2002, the Federal Attorney General submitted a request to the Mexican Congress to 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

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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 SFP about the illegal diversion of funds, PEMEX has been cooperating with SFP 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. On
July 31, 2002, an ethics code (Código de Ética de los Servidores Públicos de la Administración
Pública Federal) 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. Prior to this, President Vicente Fox Quesada's cabinet had committed to follow a code of ethics which embodies the conduct that the
people of Mexico expect of their public servants. 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 of its officers in order to prevent abuses. Separately, SFP, 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 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.



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 those 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. The parties agreed to a procedural schedule in order to
present additional evidence, and a ruling from the International Chamber of Commerce is expected by December 5, 2003. Pemex-Refining believes that it has sufficient elements to support an award
in its favor. 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. PEMEX prevailed in the appeal and was absolved of all related claims made by Odin.

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.
SFP 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

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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 December 17, 2002, the U.S. Court of International Trade upheld the U.S. Department of Commerce's decision not to initiate antidumping and countervailing duty investigations on crude
oil from Mexico, Saudi Arabia and Iraq and dismissed the complaint filed by Save Domestic Oil, Inc. The petitioners decided to appeal the December 17 decision, and the case was docketed
at the Federal Circuit on February 25, 2003. Petróleos Mexicanos has filed a notice of appearance with the Federal Circuit and, after coordinating with counsel for the American
Petroleum Institute, ExxonMobil, Shell, BP Saudi ARAMCO and PDVSA, filed a brief with the United States Court of Appeals for the Federal Circuit on June 9, 2003.

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, 1998, 1999, 2000, 2001 and 2002, Petróleos Mexicanos made advance payments to the Mexican Government in the
aggregate of Ps. 3,064 million, Ps. 5,138 million, Ps. 5,564 million, Ps. 2,153 million and Ps. 9,712 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 debt securities issued by Petróleos Mexicanos and the Pemex Project Funding Master Trust takes place primarily in the
over-the-counter market. These debt securities are listed 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

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 program, Petróleos Mexicanos issued the following securities:



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:

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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, The Bank of New York and The Bank of New York (Delaware) entered into a Trust Agreement, which created the Pemex Project
Funding Master Trust and designated 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 the Pemex Project Funding Master Trust, acting through The Bank of New York, entered into an Assignment and Indemnity Agreement. This agreement provides for the assignment by
the subsidiary entities to the Pemex Project Funding Master Trust of certain payment obligations relating to PIDIREGAS, the arrangement by Petróleos Mexicanos of financing on behalf of
the Pemex Project Funding Master Trust to meet such payment obligations, the payment by Petróleos Mexicanos and the subsidiary entities to the Pemex Project Funding Master Trust of the
amounts necessary to meet the Pemex Project Funding Master Trust's obligations under such financings and the indemnification of the 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 the Pemex Project Funding Master Trust,
Petróleos Mexicanos and the Pemex Project Funding Master Trust entered into an Indenture Agreement with Deutsche Bank, as Trustee. This agreement provides for the issuance by the 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, the Pemex Project Funding Master Trust has issued the following securities:



On
November 14, 2001, the 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, the Pemex Project Funding Master Trust issued the following securities:



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On
December 3, 2002, the Pemex Project Funding Master Trust increased the aggregate principal amount of debt securities issuable under its Medium-Term Notes program to
U.S. $11,000,000,000. Following the increase the 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, the Pemex Project Funding Master Trust, as transferee, and
Petróleos Mexicanos, as guarantor, entered into aConvenio de Derivación de Fondos(Transfer of Funds Agreement) whereby
the Ministry of Finance and Public Credit transferred U.S. $676,161,058 net in cash to the Pemex Project Funding Master Trust which will assume U.S. $698.3 million of the Mexican Government's
payment obligations from January 2003 through December 2006.

As
of December 31, 2002 and 2001, PEMEX has entered into contracts with various contractors for an approximate amount of Ps. 117,644 million and Ps. 46,820 million,
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 SEC 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.

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Pursuant
to a registration statement on Form F-4 (File No. 333-9310), which was declared effective by the SEC 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 SEC 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 No. 333-10706), which was declared effective by the SEC 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.

Pursuant
to a registration statement on Form F-4 (File No. 333-13812), which was declared effective by the SEC on August 29, 2001, the Pemex
Project Funding Master Trust, 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. $1,000,000,000 of 8.50% Notes due 2008 and up to U.S. $1,000,000,000 of 9.125% Notes due 2010. These securities are collectively referred to as the 2001 Securities.

Pursuant
to a registration statement on Form F-4 (File No. 333-102993) which was declared effective by the SEC on February 14, 2003,
Petróleos Mexicanos, Pemex Exploration and Production, Pemex-Refining, and Pemex-Gas and Basis Petrochemicals, registered pursuant to the Securities Act of 1933 up to U.S.
$600,000,000 of 6.50% Notes due February 1, 2005. Pursuant to a registration statement on Form F-4 (File No. 333-103197), which was declared effective by
the SEC on February 24, 2003, the Pemex Project Funding Master Trust, 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. $750,000,000 8.00% Notes due 2011, up to U.S. $1,000,000,000 7.875% Notes due 2009, up to U.S. $500,000,000 8.625% Bonds due
2022 and up to U.S. $1,000,000,000 7.375% Notes due 2014. The securities registered in 2003 under these two registration statements are collectively referred to as the 2003 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, the 1999
Securities, the 2001 Securities and the 2003 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, the 1999 Securities, the 2001 Securities or the 2003 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, 1999 Securities, the 2001
Securities or the 2003 Securities. This summary does not discuss the consequences (if any) of such treaties.

Each
holder or beneficial owner of 1997 Securities, 1998 Securities, 1999 Securities, the 2001 Securities or the 2003 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.

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This summary of certain Mexican federal tax considerations refers only to holders of 1997 Securities, 1998 Securities, 1999 Securities, the 2001 Securities or the
2003 Securities that are not residents of Mexico for Mexican tax purposes and do not conduct any 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 such 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 legal entity or individual has a permanent establishment 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 the MexicanLey 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 of the securities), made by a Mexican issuer (including
Petróleos Mexicanos) in respect of notes or bonds and other debt securities 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 effective beneficiaries, directly or indirectly, individually or jointly with related parties, receive more than 5% of the interest paid on the notes or bonds and are holders, directly or
indirectly, individually or jointly, with related parties of more than 10% of the voting stock of the issuer or entities 20% or more of whose stock is owned directly or indirectly, individually or
jointly, by parties related to the issuer, the withholding tax rate applicable to payment of interest on the 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, the 1999 Securities, the 2001 Securities and the 2003 Securities to non-Mexican pension or retirement funds will be exempt from Mexican withholding
taxes, provided that any such fund:



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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.

Holders
or beneficial owners of the 1997 Securities, the 1998 Securities, the 1999 Securities, the 2001 Securities or the 2003 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, the 1999 Securities, the 2001 Securities or the 2003 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 from a Mexican resident or a non-resident with a permanent establishment in Mexico, is deemed interest income, and therefore, subject to taxes in Mexico. Such
interest income results from the difference between the face value (plus accrued interest not subject to withholding) and the purchase price of such notes or bonds.

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, the 1999 Securities, the 2001 Securities or the 2003 Securities. A Foreign Holder of the 1997
Securities, the 1998 Securities, the 1999 Securities, the 2001 Securities or the 2003 Securities will not be liable for Mexican estate, succession, gift, inheritance or similar tax with respect to
such securities.

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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, the 1999
Securities, the 2001 Securities or the 2003 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, the 1999 Securities, the 2001 Securities or the 2003
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, the 1999 Securities, the 2001 Securities or the 2003 Securities at
their issue price as part of the initial distribution. Investors who purchase the 1997 Securities, the 1998 Securities, the 1999 Securities, the 2001 Securities or the 2003 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, the 1999 Securities, the 2001 Securities or the 2003 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 interest income in respect of the 1997 Securities, the 1998 Securities, the 1999
Securities, the 2001 Securities or the 2003 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, 1999 Security, 2001
Security or 2003 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, the 1999 Securities, the 2001 Securities or 2003 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, the 1999 Securities, the 2001
Securities or 2003 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

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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, the 1999 Securities, the 2001 Securities or 2003 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, 1999 Security, 2001 Security or 2003 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 each of the 1997 Securities, the 1998
Securities, 1999 Securities, the 2001 Securities and the 2003 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 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 we make electronically with the SEC 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

We face significant market risks in foreign exchange, interest rates and hydrocarbon prices as part of our normal business operations. 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. We have developed policies aimed at managing the volatility inherent in these normal business exposures, and, in accordance
with these policies, we enter into various transactions using derivative financial and commodity instruments, including conventional exchange-traded derivative instruments such as futures and options,
as well as over-the-counter instruments such as swaps, options and forward contracts.

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.

Commodity Price Risk



Our exports and domestic sales are related to international hydrocarbon prices, thus exposing us to fluctuations in international markets. We share this risk with
the Mexican Government through our current fiscal regime. In order to mitigate this risk, since 1998, the Mexican Government, along with PEMEX, has actively participated with the major international
oil producers to improve international oil prices by reducing crude oil exports volumes. See "Item 5Operating and Financial Review and ProspectsExport Agreements."

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 expected additional value derived from crude oil exports should exceed
the expected cost of the support mechanisms. Nonetheless, during December 2002, we entered into a short-term oil price hedge through the use of options for approximately 6% of Pemex
total production. We continued this strategy during January 2003, and we hedged against potential decreases in short-term crude oil prices for approximately 20% of total production.



We balance our overall petroleum product supply and demand through PMI Trading, managing only those exposures associated with our immediate operational program.
To this end, we use the full range of conventional oil price-related financial and commodity derivatives available in the oil markets. Our benchmark for petroleum product commercial activities is the
prevailing market price. As of December 31, 2002, the value at risk as measured against the above-mentioned benchmark was U.S. $4.8 million.



As described above under "Item 4Information on the CompanyBusiness OverviewGas and Basic PetrochemicalsHedging
Operations," we have entered into a number of three-year agreements with Mexican industrial consumers 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.

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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 fixed-price 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.

Foreign Currency Exchange Rate Risk

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. We perceive this risk as manageable, without the need for hedging instruments, because most of our
investments and debt issuances are made in U.S. dollars and, therefore, the impact of the fluctuation in the exchange rate between the U.S. dollar and the peso on our revenues is offset by its impact
on our obligations.

Most
of our debt is denominated in U.S. dollars. However, we borrow in currencies other than the U.S. dollar. Therefore, fluctuations in non-dollar currencies can increase
our costs of funding. 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 2001 and 2002, Petróleos Mexicanos entered into various cross-currency swaps to hedge currency risk arising from Euro- and Japanese yen-denominated debt
obligations issued by the Pemex Project Funding Master Trust. As of December 31, 2002, the aggregate notional amount of the swaps entered into in 2001 and 2002 was U.S. $883.8 million
and U.S. $1,201.1 million, respectively, for a total outstanding position on currency swaps at year-end of U.S. $3,057.8 million. In addition, during 2003,
Petróleos Mexicanos has entered into a series of cross-currency swaps for a nominal amount of U.S. $1,212 million. In December 2002, Petróleos Mexicanos
entered into a cross-currency swap to hedge its exposure in Japanese yen with a termination date in 2023. Given the long-term nature of this obligation, the swap used to hedge this risk
includes an option linked to a well-defined set of credit default events. In case such an event occurs, the swap terminates without any payment obligation by either party. This swap has a
notional amount of U.S. $241.4 million and accounts for 5.7% of the total outstanding position.

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. In 2000
and 2002, we capitalized our debt-related foreign exchange losses of Ps. 140 million and Ps. 4,570 million, respectively, resulting from foreign exchange losses of certain
subsidiary entities (the remaining subsidiary entities recorded foreign exchange gains). In 2001, we did not capitalize foreign exchange losses. We do not capitalize debt-related foreign
exchange gains nor foreign exchange gains or losses related to
our 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 results of operations. We recorded total
net foreign exchange gains of Ps. 877 million in 2000, Ps. 3,892 million in 2001 and Ps. 426 million in 2002.



We are exposed to fluctuations in interest rates on short and long-term floating rate instruments. We are predominantly exposed to U.S. dollar LIBOR
interest rates because our borrowings are primarily denominated in, or swapped into, U.S. dollars. We use derivative instruments as described below to achieve a desired mix of fixed and floating
instruments in our debt portfolio. As of December 31, 2002, the proportion of floating rate debt was approximately 43% of total net debt outstanding.

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 either the floating three-month or six-month LIBOR. As of December 31, 2002, Petróleos Mexicanos
was a party to interest-rate swap agreements with a notional amount of U.S. $404.1 million, with an average fixed interest rate of approximately 5.12% and a weighted average term of
approximately 6.19 years. We did not enter into any interest-rate swap agreements in 2003.

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The
market value of Petróleos Mexicanos' foreign exchange and interest rate derivatives position was negative Ps. 3,366.3 million as of December 31, 2001 and
negative Ps. 1,270.3 million as of December 31, 2002.

The
effects on the consolidated statements of income of entering into "swap" transactions designated as hedges are recorded as incurred and when the precise settlement amounts are known.
The effects on the consolidated statements of income of derivative instruments not designated as hedges are recognized according to changes in their fair value. Such amounts are included in the
consolidated statements of income within the "Interest, net" caption. See Note 10 to the Financial Statements.

When
derivative results are favorable to Petróleos Mexicanos, it 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.



Petróleos Mexicanos currently holds four equity swaps with respect to shares of Repsol. In 1994, Petróleos Mexicanos entered into an
equity swap, which was restructured in March 2000, resulting in a swap with respect to 26,427,781 Repsol shares divided in three tranches, having one-, two- and
three-year maturities. Upon the maturity of the first two tranches, Petróleos Mexicanos has entered into three-month swaps for such shares.

In
addition, in January 2000, Petróleos Mexicanos entered into a second equity swap with respect to 13,679,704 Repsol shares maturing in three years. As of
December 31, 2002 the market value of the Repsol shares was U.S. $13.22 per share.

Instruments Entered into for Trading Purposes

As part of our client-based approach, we offer natural gas derivatives to our clients. As mentioned above, our benchmark is the market price; therefore, we enter
into derivative transactions with the opposite position in order to offset the effect of the derivatives offered to our clients. Neither Bulletin C-2 nor SFAS No.133 allows derivative
positions to serve as hedges for other derivatives. Therefore, these operations are for trading purposes. However, given that they have offsetting effects, we are only exposed to basis risk arising
from the difference between the index offered to clients and the underlying index related to the offsetting position.

The
following tables set forth our portfolio of debt and derivative financial instruments as of December 31, 2002. It should be noted that:



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142

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Quantitative Disclosure of Market Risk (Interest Rate Sensitivity) as of December 31, 2002(1)

|                         |                              | Year of Expected Maturity Date |           
|------------------------ | ---------------------------- | ------------------------------ | ----------
|
|
|Liabilities              |                              |                                |           
|Outstanding debt         |                              |                                |           
|                         | Fixed rate (U.S. dollars)    |                                | 755,735   
|                         |                              | Average Interest Rate (%)      |           
|                         | Fixed rate (Japanese yen)    |                                | 1,759,538 
|                         |                              | Average Interest Rate (%)      |           
|                         | Fixed rate (British pounds)  |                                | 1,246,628 
|                         |                              | Average Interest Rate (%)      |           
|                         | Fixed rate (Euro)            |                                | 1,893,863 
|                         |                              | Average Interest Rate (%)      |           
|Total fixed rate debt    |                              | 5,655,764                      |           
|                         |                              |                                |           
|                         | Variable rate (U.S. dollars) |                                | 35,958,262
|                         | Variable rate (Swiss francs) |                                | 1,595     
|                         | Variable rate (Euro)         |                                | 27,865    
|                         | Variable rate (pesos)        |                                | 4,500,000 
|Total variable rate debt |                              | 40,487,721                     |           
|                         |                              |                                |           
|                         | Total Debt                   |                                | 46,143,484
|                         |                              |                                |           

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Quantitative Disclosure of Market Risk (Interest Rate Risk) as of December 31, 2002(1)

Derivative financial instruments held or issued for purposes other than trading:

|                        |                   | Year of Expected Maturity Date |                         
|----------------------- | ----------------- | ------------------------------ | ------------------------
|
|
|Hedging Instruments     |                   |                                |                         
|Interest Rate Swaps     |                   |                                |                         
|                        | Variable to Fixed |                                |                        
|                        |                   | Average pay rate               |                         
|                        |                   | Average receive rate           |                         
|                        |                   | Cross Currency Swaps           |                         
|                        |                   | Euro to U.S. dollars           |                         
|                        |                   | Japanese Yen to U.S. dollars   |                         
|                        |                   | British pounds to U.S. dollars |                         
|Non-Hedging Instruments |                   |                                |                         
|Interest Rate Swaps     |                   |                                |                         
|                        |                   | Variable to fixed              |                         
|                        |                   |                                | Average pay rate (%)    
|                        |                   |                                | Average receive rate (%)
|                        |                   |                                | Total                   

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Quantitative Disclosure of Market Risk (Equity Swap) as of December 31, 2002(1)

|            |  | Year of Expected Maturity Date | 
|----------- |  | ------------------------------ | 
|
|
|Equity Swap |  | 6,589,202                      | 

---

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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

Within the 90 days prior to the date of this report, we carried out an evaluation under the supervision and with the participation of our management,
including our Director General and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. There are inherent limitations to the
effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even
effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon and as of the date of our evaluation, our Director General and our
Chief Financial Officer concluded that the disclosure controls and procedures are effective in all material respects to ensure that the information required to be disclosed in the reports we file and
submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported as and when required.

There
have been no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.

Item 16.    [Reserved]

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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.

Item 19.    Exhibits.

(a)   List of Financial Statements:

PageReport of PricewaterhouseCoopers, S.C., Independent Accountants

F-1Report of Mancera, S.C. (A Member Practice of Ernst & Young Global), Independent Auditors

F-3Consolidated Balance Sheets as of December 31, 2002 and 2001

F-4Consolidated Statements of Operations for the years ended December 31, 2002, 2001 and 2000

F-5Consolidated Statements of Changes in Equity for the years ended December 31, 2002, 2001 and 2000

F-6Consolidated Statements of Changes in Financial Position for the years ended December 31, 2002, 2001 and 2000

F-7Notes to the Consolidated Financial Statements

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

F-112Notes to the Unaudited Supplemental Consolidated Information Prepared on a Price-level Adjusted Basis

F-117Appendix: Reports of Other Independent Accountants

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

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

F/A-3Report of PricewaterhouseCoopers on P.M.I. Holdings North America, Inc.

F/A-5Report of PricewaterhouseCoopers on P.M.I. Holdings N.V.

F/A-6Report of PricewaterhouseCoopers on P.M.I. Holdings B.V.

F/A-7Report of PricewaterhouseCoopers on P.M.I. Norteamérica, S.A. de C.V.

F/A-8Report of PricewaterhouseCoopers on P.M.I. Marine Limited Mexican Branch

F/A-10Report of PricewaterhouseCoopers on P.M.I. Services B.V.

F/A-12Report of PricewaterhouseCoopers on P.M.I. Services North America, Inc.

F/A-13


(b)   List of Exhibits

|1.1 |  | Ley Orgánica de Petróleos Mexicanos y Organismos Subsidiarios(the Organic Law of Petróleos Mexicanos and Subsidiary Entities), as amended effective January 1, 1994
(previously filed as Exhibit 3.1 to Petróleos Mexicanos' Registration Statement on Form F-1 (File No. 33-86304) on November 14, 1994 and incorporated by reference herein).                                
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.2 |  | Reglamento de la Ley Orgánica de Petróleos Mexicanos y Organismos Subsidiarios(Regulations to the Organic Law of Petróleos Mexicanos and Subsidiary Entities), together with
an English translation (previously filed as Exhibit 3.2 to Petróleos Mexicanos' Registration Statement on Form F-1 (File No. 33-86304) on November 14, 1994 and incorporated by reference herein).
|1.3 |  | Reglamento de Gas Natural(Natural Gas Regulation), effective November 9, 1995 together with an English translation (previously filed as Exhibit 1 to Petróleos Mexicanos' annual report on
Form 20-F (File No. 0-99) on June 28, 1996 and incorporated by reference herein).                                                                                                   
|    |  |                                                                                                                                                                                                                                                                                                                                                                                

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|1.4 |  | Decreto por el que se Reforma la Ley Reglamentaria del Artículo 27 Constitucional en el Ramo del Petróleo(Decree that Amends the Regulatory Law to Article 27 of the Political
Constitution of the United Mexican States Concerning Petroleum Affairs), effective November 14, 1996 (previously filed as Exhibit 1 to Petróleos Mexicanos' annual report on Form 20-F (File No. 0-99) on June 30, 1997 and incorporated by
reference herein).      
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.5 |  | Decreto por el que se adiciona el Reglamento de la Ley Orgánica de Petróleos Mexicanos y Organismos Subsidiarios(Decree that adds to the Regulations to the Organic Law of
Petróleos Mexicanos and Subsidiary Entities), together with an English translation, effective April 30, 2001 (previously filed as Exhibit 1.5 to Petróleos Mexicanos' annual report on Form 20-F (File No. 0-99) on June 28, 2001 and
incorporated by reference herein).
|1.6 |  | Ley Orgánica de Petróleos Mexicanos y Organismos Subsidiarios(the Organic Law of Petróleos Mexicanos and Subsidiary Entities), as amended effective January 16, 2002
(English translation) (previously filed as Exhibit 1.6 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).                                                                    
|2.1 |  | Indenture, dated as of September 18, 1997, between Petróleos Mexicanos and Bankers Trust Company (previously filed as Exhibit 4.1 to Petróleos Mexicanos' Registration Statement on Form F-4 (File No.
333-7796) on October 17, 1997 and incorporated by reference herein).                                                                                                                                                                        
|2.2 |  | Indenture, dated August 7, 1998, between Petróleos Mexicanos and Bankers Trust Company (previously filed as Exhibit 4.1 to Petróleos Mexicanos' Registration Statement on Form F-4 on August 11, 1998 and
incorporated by reference herein).                                                                                                                                                                                                       
|2.3 |  | Indenture, dated July 15, 1999, between Petróleos Mexicanos and Bankers Trust Company (previously filed as Exhibit 4.1 to Petróleos Mexicanos' Registration Statement on Form F-4 (File No. 333-10706) on
August 23, 1999 and incorporated by reference herein).                                                                                                                                                                                   
|2.4 |  | Indenture, dated July 31, 1999, between Petróleos Mexicanos and Bankers Trust Company (previously filed as Exhibit 4.1 to Petróleos Mexicanos' Registration Statement on Form F-4 (File No. 333-10706) on
September 29, 1999 and incorporated by reference herein).                                                                                                                                                                                
|2.5 |  | Indenture, dated as of July 31, 2000, among Pemex Project Funding Master Trust, Petróleos Mexicanos and Bankers Trust (previously filed as Exhibit 2.5 to Petróleos Mexicanos' annual report on Form 20-F (File
No. 0-99) on June 28, 2001 and incorporated by reference herein).                                                                                                                                                                  
|2.6 |  | Indenture, dated as of February 3, 2003, between Petróleos Mexicanos and Deutsche Bank Trust Company Americas (previously filed as Exhibit 4.7 to Petróleos Mexicanos' Registration Statement on Form
F-4 (File No. 333-102993) on February 12, 2003 and incorporated by reference herein).                                                                                                                                                        
|2.7 |  | Fiscal Agency Agreement between Petróleos Mexicanos and Bankers Trust, dated as of June 16, 1993, and amended and restated as of February 26, 1998 (previously filed as Exhibit 3.1 to Petróleos
Mexicanos' annual report on Form 20-F (File No. 0-99) on June 29, 2000 and incorporated by reference herein).                                                                                                                                     
|2.8 |  | Trust Agreement, dated as of November 10, 1998, among The Bank of New York, The Bank of New York (Delaware) and Petróleos Mexicanos (previously filed as Exhibit 3.1 to Petróleos Mexicanos' annual report
on Form 20-F (File No. 0-99) on June 30, 1999 and incorporated by reference herein).                                                                                                                                                    
|2.9 |  | Assignment and Indemnity Agreement, dated as of November 10, 1998, among Petróleos Mexicanos, Pemex-Exploración y Producción, Pemex-Refinación, Pemex-Gas y Petroquímica
Básica and Pemex Project Funding Master Trust, (previously filed as Exhibit 3.2 to Petróleos Mexicanos' annual report on Form 20-F (File No. 0-99) on June 30, 1999 and incorporated by reference herein).                                                                
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    

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|2.10 |  | Guaranty Agreement, dated July 29, 1996, among Petróleos Mexicanos, Pemex-Exploración y Producción, Pemex-Refinación and Pemex-Gas y Petroquímica Básica (previously filed as
Exhibit 4.4 to Petróleos Mexicanos' Registration Statement on Form F-4 (File No. 333-7796) on October 17, 1997 and incorporated by reference herein).                                                                
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.1  |  | Agreement for the Financial Strengthening of Petróleos Mexicanos between the Federal Government of Mexico and Petróleos Mexicanos, together with a summary in English (previously filed as Exhibit 10.1 to
Petróleos Mexicanos' Registration Statement on Form F-1 (File No. 33-86304) on November 14, 1994 and incorporated by reference herein).                                                 
|4.2  |  | Amendment to the Agreement for the Financial Strengthening of Petróleos Mexicanos between the Federal Government of Mexico and Petróleos Mexicanos, dated December 18, 1997, together with an English
translation (previously filed as Exhibit 10.1 to Amendment No. 1 to Petróleos Mexicanos' annual report on Form 20-F/A (File No. 0-99) on July 20, 1998 and incorporated by reference herein).
|4.3  |  | Receivables Purchase Agreement, dated as of December 1, 1998, by and among Pemex Finance, Ltd., P.M.I. Comercio Internacional, S.A. de C.V., P.M.I. Services, B.V. and Pemex-Exploración y Producción.
(previously filed as Exhibit 3.3 to Petróleos Mexicanos' annual report on Form 20-F (File No. 0-99) on June 30, 1999 and incorporated by reference herein).                                 
|4.4  |  | Transfer of Funds Agreement, dated as of November 24, 2000, among Pemex Project Funding Master Trust, Petróleos Mexicanos and the Federal Government (English translation) (previously filed as 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).                                    
|7.1  |  | Computation of Ratio of Earnings to Fixed Charges.                                                                                                                                                                                                                                                                                                                                                 
|8.1  |  | For a list of subsidiaries, their jurisdiction of incorporation and the names under which they do business, see "Consolidated Structure of PEMEX" on page 3.                                                                                                                                                                                                                                       
|12.1 |  | Certification of Director General and Chief Financial Officer of Petróleos Mexicanos, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                   

148

---

INDEX TO FINANCIAL STATEMENTS

|                                                                                                              |  | Page  
|------------------------------------------------------------------------------------------------------------- |  | ------
|Report of PricewaterhouseCoopers, S.C., Independent Accountants                                               |  | F-1   
|Report of Mancera, S.C. (A Member Practice of Ernst & Young Global), Independent Auditors                     |  | F-3   
|Consolidated Balance Sheets as of December 31, 2002 and 2001                                                  |  | F-4   
|Consolidated Statements of Operations for the years ended December 31, 2002, 2001 and 2000                    |  | F-5   
|Consolidated Statements of Changes in Equity for the years ended December 31, 2002, 2001 and 2000             |  | F-6   
|Consolidated Statements of Changes in Financial Position for the years ended December 31, 2002, 2001 and 2000 |  | F-7   
|Notes to the Consolidated Financial Statements                                                                |  | F-8   
|Unaudited Supplemental Consolidated Information Prepared on a Price-level Adjusted Basis                      |  | F-112 
|Notes to the Unaudited Supplemental Consolidated Information Prepared on a Price-level Adjusted Basis         |  | F-117 
|Appendix: Reports of Other Independent Accountants                                                            |  | F/A-1 
|Report of PricewaterhouseCoopers on Integrated Trade Systems, Inc.                                            |  | F/A-2 
|Report of PricewaterhouseCoopers on P.M.I. Trading Limited Mexican Branch                                     |  | F/A-3 
|Report of PricewaterhouseCoopers on P.M.I. Holdings North America, Inc.                                       |  | F/A-5 
|Report of PricewaterhouseCoopers on P.M.I. Holdings N.V.                                                      |  | F/A-6 
|Report of PricewaterhouseCoopers on P.M.I. Holdings B.V.                                                      |  | F/A-7 
|Report of PricewaterhouseCoopers on P.M.I. Norteamérica, S.A. de C.V.                                         |  | F/A-8 
|Report of PricewaterhouseCoopers on P.M.I. Marine Limited Mexican Branch                                      |  | F/A-10
|Report of PricewaterhouseCoopers on P.M.I. Services B.V.                                                      |  | F/A-12
|Report of PricewaterhouseCoopers on P.M.I. Services North America, Inc.                                       |  | F/A-13

---



REPORT OF INDEPENDENT ACCOUNTANTS

Mexico
City, Mexico, May 12, 2003

To
the General Comptroller's 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 (collectively "PEMEX") as of
December 31, 2002 and 2001, and the related consolidated statements of operations, changes in equity and changes in financial position for the years then ended. These financial statements are
the responsibility of the Management of PEMEX. Our responsibility is to express an opinion on these financial statements based on our audits. The financial statements of PEMEX for the year ended
December 31, 2000 were audited by other independent accountants whose report dated November 27, 2002, expressed an unqualified opinion on those statements.

We
conducted our audits in accordance with auditing standards generally accepted in Mexico and 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 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 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, "Recognition of the Effects of Inflation on Financial Information", is disclosed in Note 15 to the consolidated financial statements.

F-1

---

As
discussed in Note 2 o) to the consolidated financial statements, effective January 1, 2001, PEMEX adopted the guidelines of the Bulletin C-2,
"Financial Instruments", issued by the Mexican Institute of Public Accountants. As a result, a cumulative effect charge totalling Ps. 1,331,247,000 was recognized in earnings.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of PEMEX as of December 31,
2002 and 2001, and the consolidated results of their operations, changes in equity and changes in financial position for the years then ended, 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 15 to the consolidated financial statements).

Accounting
principles generally accepted in Mexico vary in certain significant respects from generally accepted accounting principles in the United States of America. The application of
generally accepted accounting principles in the United States of America would have affected the determination of consolidated net loss expressed in Mexican Pesos for the years ended
December 31, 2002 and 2001 and the determination of consolidated deficit and consolidated financial position also expressed in Mexican Pesos at December 31, 2002 and 2001 to the extent
summarized in Note 19 to the consolidated financial statements.

|PricewaterhouseCoopers, S. C.                         |  | 
|----------------------------------------------------- |  | 
|/s/FRANCISCO J. HERNÁNDEZ F.Francisco J. Hernández F. |  | 

F-2

---

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 sheet of Petróleos Mexicanos, Subsidiary Entities and Subsidiary Companies as of December 31, 2000, and the
related consolidated statements of operations, changes in equity and changes in financial position for the year then ended. 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 audit. We did not audit the
financial statements of certain Subsidiary Companies, whose statements reflect total assets constituting 1% and total revenues constituting 8%, 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 audit 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 audit 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 15 to the consolidated financial statements.

In
our opinion, based on our audit 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 the consolidated results of their operations, changes in
equity and changes in financial position for the year then ended, 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 15 to the consolidated financial statements), which differ in certain respects from those followed in the United States (see Note 19 to
the consolidated financial statements).

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

Mexico City, Mexico
November 27, 2002

F-3

---



PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES        CONSOLIDATED BALANCE SHEETS        AS OF DECEMBER 31, 2002 AND 2001        (In thousands of pesos and
thousands of U.S. dollars)  (Notes 1, 2 and 14)

|             |                                                                                                                | 2002                         |             | 2002       |            | 2001         |            
|------------ | -------------------------------------------------------------------------------------------------------------- | ---------------------------- | ----------- | ---------- | ---------- | ------------ | -----------
|ASSETS:      |                                                                                                                |                              |             |            |            |              |            
|             | Current assets:                                                                                                |                              |             |            |            |              |            
|             | Cash and cash equivalents                                                                                      |                              | US$         | 4,254,686  |            | Ps.          | 43,876,446 
|             | Accounts, notes receivable and other, net (Note 3)                                                             |                              |             | 5,369,435  |            |              | 55,372,300 
|             | Inventories, net (Note 4)                                                                                      |                              |             | 2,366,542  |            |              | 24,404,969 
|             |                                                                                                                |                              |             |            |            |              |            
|             |                                                                                                                | Total current assets         |             |            | 11,990,663 |              |            
|             | Properties and equipment, net (Note 5)                                                                         |                              |             | 47,136,773 |            |              | 486,097,969
|             | Intangible asset derived from the actuarial computation of labor obligations and other assets (Notes 6 and 11) |                              |             | 8,497,217  |            |              | 87,627,549 
|             |                                                                                                                |                              |             |            |            |              |            
|             |                                                                                                                | Total assets                 |             | US$        | 67,624,653 |              | Ps.        
|             |                                                                                                                |                              |             |            |            |              |            
|LIABILITIES: |                                                                                                                |                              |             |            |            |              |            
|             | Current liabilities:                                                                                           |                              |             |            |            |              |            
|             | Current portion of long-term debt (Note 9)                                                                     |                              | US$         | 4,799,699  |            | Ps.          | 49,496,895 
|             | Current portion of notes payable to contractors (Note 8)                                                       |                              |             | 152,974    |            |              | 1,577,543  
|             | Suppliers                                                                                                      |                              |             | 2,838,363  |            |              | 29,270,622 
|             | Accounts payable and accrued expenses                                                                          |                              |             | 652,784    |            |              | 6,731,832  
|             | Taxes payable                                                                                                  |                              |             | 2,588,478  |            |              | 26,693,674 
|             |                                                                                                                |                              |             |            |            |              |            
|             |                                                                                                                | Total current liabilities    |             |            | 11,032,298 |              |            
|             |                                                                                                                |                              |             |            |            |              |            
|             | Long-term debt (Note 9)                                                                                        |                              |             | 18,525,865 |            |              | 191,047,982
|             | Notes payable to contractors (Note 8)                                                                          |                              |             | 2,658,851  |            |              | 27,419,405 
|             | Sale of future accounts receivable (Note 7)                                                                    |                              |             | 4,212,256  |            |              | 43,438,885 
|             | Reserve for sundry creditors and others                                                                        |                              |             | 745,532    |            |              | 7,688,294  
|             | Reserve for retirement payments, pensions and seniority premiums (Note 11)                                     |                              |             | 20,685,435 |            |              | 213,318,552
|             |                                                                                                                |                              |             |            |            |              |            
|             |                                                                                                                | Total long-term liabilities  |             |            | 46,827,939 |              |            
|             |                                                                                                                |                              |             |            |            |              |            
|             |                                                                                                                | Total liabilities            |             |            | 57,860,237 |              |            
|             |                                                                                                                |                              |             |            |            |              |            
|             | Commitments and contingencies (Note 16)                                                                        |                              |             |            |            |              |            
|EQUITY:      |                                                                                                                |                              |             |            |            |              |            
|             | Certificates of Contribution "A"                                                                               |                              |             | 991,269    |            |              | 10,222,463 
|             | Specific oil-field exploration and depletion reserve                                                           |                              |             | 950,715    |            |              | 9,804,251  
|             | Revaluation surplus                                                                                            |                              |             | 18,475,002 |            |              | 190,523,462
|             | Accumulated losses:                                                                                            |                              |             |            |            |              |            
|             |                                                                                                                | From prior years             |             |            | (7,695,759 | )            |            
|             |                                                                                                                | Net loss for the year        |             |            | (2,956,811 | )            |            
|             |                                                                                                                |                              |             |            |            |              |            
|             |                                                                                                                |                              | (10,652,570 | )          |            | (109,854,627 | )          
|             |                                                                                                                |                              |             |            |            |              |            
|             |                                                                                                                | Total equity                 |             |            | 9,764,416  |              |            
|             |                                                                                                                |                              |             |            |            |              |            
|             |                                                                                                                | Total liabilities and equity |             | US$        | 67,624,653 |              | Ps.        
|             |                                                                                                                |                              |             |            |            |              |            

The accompanying notes are an integral part of these consolidated financial statements.

F-4

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES        CONSOLIDATED STATEMENTS OF OPERATIONS        FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000    
(In thousands of pesos and thousands of U.S. dollars)  (Notes 1 and 2)

|                                                                                                                                                                       |  | 2002 |            | 2002 |      | 2001        |   | 2000 |            
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | ---- | ---- | ----------- | - | ---- | -----------
|Net sales:                                                                                                                                                             |  |      |            |      |      |             |   |      |            
|Domestic                                                                                                                                                               |  | US$  | 30,474,729 |      | Ps.  | 314,270,644 |   | Ps.  | 303,853,144
|Export                                                                                                                                                                 |  |      | 16,210,082 |      |      | 167,166,473 |   |      | 141,477,018
|                                                                                                                                                                       |  |      |            |      |      |             |   |      |            
|                                                                                                                                                                       |  |      | 46,684,811 |      |      | 481,437,117 |   |      | 445,330,162
|Foreign exchange gain, net                                                                                                                                             |  |      | 41,294     |      |      | 425,849     |   |      | 3,891,701  
|Other revenues                                                                                                                                                         |  |      | 532,865    |      |      | 5,495,172   |   |      | 8,163,397  
|                                                                                                                                                                       |  |      |            |      |      |             |   |      |            
|Total revenues                                                                                                                                                         |  |      | 47,258,970 |      |      | 487,358,138 |   |      | 457,385,260
|                                                                                                                                                                       |  |      |            |      |      |             |   |      |            
|Costs and operating expenses:                                                                                                                                          |  |      |            |      |      |             |   |      |            
|Cost of sales                                                                                                                                                          |  |      | 15,302,059 |      |      | 157,802,482 |   |      | 165,314,521
|Transportation and distribution expenses                                                                                                                               |  |      | 1,450,900  |      |      | 14,962,411  |   |      | 13,588,482 
|Administrative expenses                                                                                                                                                |  |      | 3,116,910  |      |      | 32,143,139  |   |      | 28,025,338 
|Interest, net                                                                                                                                                          |  |      | 1,335,556  |      |      | 13,772,922  |   |      | 13,104,015 
|Other expenses                                                                                                                                                         |  |      | 540,974    |      |      | 5,578,792   |   |      | 6,649,928  
|                                                                                                                                                                       |  |      |            |      |      |             |   |      |            
|Total costs and operating expenses                                                                                                                                     |  |      | 21,746,399 |      |      | 224,259,746 |   |      | 226,682,284
|                                                                                                                                                                       |  |      |            |      |      |             |   |      |            
|Income before hydrocarbon extraction duties and other, special tax on production and services, and cumulative effect of adoption of new financial instruments standard |  |      | 25,512,571 |      |      | 263,098,392 |   |      | 230,702,976
|                                                                                                                                                                       |  |      |            |      |      |             |   |      |            
|Hydrocarbon extraction duties and other                                                                                                                                |  |      | 17,367,180 |      |      | 179,099,049 |   |      | 168,263,587
|Special tax on production and services (IEPS Tax)                                                                                                                      |  |      | 11,102,202 |      |      | 114,491,456 |   |      | 95,198,729 
|                                                                                                                                                                       |  |      |            |      |      |             |   |      |            
|                                                                                                                                                                       |  |      | 28,469,382 |      |      | 293,590,505 |   |      | 263,462,316
|                                                                                                                                                                       |  |      |            |      |      |             |   |      |            
|Cumulative effect of adoption of new financial instruments standard (Note 10)                                                                                          |  |      |            |      |      |             |   |      | (1,331,247 
|                                                                                                                                                                       |  |      |            |      |      |             |   |      |            
|Net loss for the year                                                                                                                                                  |  | (US$ | 2,956,811  | )    | (Ps. | 30,492,113  | ) | (Ps. | 34,090,587 
|                                                                                                                                                                       |  |      |            |      |      |             |   |      |            

The accompanying notes are an integral part of these consolidated financial statements.

F-5

---



PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES        CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY        FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000        (In thousands of pesos and thousands of U.S. dollars)  (Notes 1 and 2)

|                              |                                                                                                                                                                 |     |            | Specific
oil-fie
exploration
and depletion
reserve |     |            |            | Accumulated losses |             |            |     
|----------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------- | --- | ---------- | -------------------------------------------------- | --- | ---------- | ---------- | ------------------ | ----------- | ---------- | ----
|
|Balances at December 31, 1999 |                                                                                                                                                                 | Ps. | 10,222,463 |                                                    | Ps. | 10,449,482 |            | Ps.                | 162,011,661 |            | (Ps.
|                              | Transfer to prior years' accumulated losses                                                                                                                     |     |            |                                                    |     |            |            |                    |             |            |     
|                              | Minimum guaranteed dividends paid to the Mexican Government approved by the Board of Directors on May 9, 2000                                                   |     |            |                                                    |     |            |            |                    |             |            |     
|                              | Dividends paid to the Mexican Government approved by the Board of Directors on May 9, 2000                                                                      |     |            |                                                    |     |            |            |                    |             |            |     
|                              | Comprehensive loss for the year (Note 12)                                                                                                                       |     |            |                                                    |     |            | 2,241,993  |                    |             | 12,042,509 |     
|                              |                                                                                                                                                                 |     |            |                                                    |     |            |            |                    |             |            |     
|Balances at December 31, 2000 |                                                                                                                                                                 |     | 10,222,463 |                                                    |     | 12,691,475 |            |                    | 174,054,170 |            |     
|                              | Transfer to prior years' accumulated losses                                                                                                                     |     |            |                                                    |     |            |            |                    |             |            |     
|                              | Minimum guaranteed dividends paid to the Mexican Government approved by the Board of Directors on May 7, 2001                                                   |     |            |                                                    |     |            |            |                    |             |            |     
|                              | Comprehensive loss for the year (Note 12)                                                                                                                       |     |            |                                                    |     |            | 3,587,309  |                    |             | 7,783,568  |     
|                              |                                                                                                                                                                 |     |            |                                                    |     |            |            |                    |             |            |     
|Balances at December 31, 2001 |                                                                                                                                                                 |     | 10,222,463 |                                                    |     | 16,278,784 |            |                    | 181,837,738 |            |     
|                              | Transfer to prior years' accumulated losses                                                                                                                     |     |            |                                                    |     |            |            |                    |             |            |     
|                              | Minimum guaranteed dividends paid to the Mexican Government approved by the Board of Directors on April 24, 2002                                                |     |            |                                                    |     |            |            |                    |             |            |     
|                              | Transfer to prior years' accumulated losses from the specific oil-field exploration and depletion reserve, approved by the Board of Directors on April 24, 2002 |     |            |                                                    |     |            | (8,222,400 | )                  |             |            |     
|                              | Comprehensive loss for the year (Note 12)                                                                                                                       |     |            |                                                    |     |            | 1,747,867  |                    |             | 8,685,724  |     
|                              |                                                                                                                                                                 |     |            |                                                    |     |            |            |                    |             |            |     
|Balances at December 31, 2002 |                                                                                                                                                                 | Ps. | 10,222,463 |                                                    | Ps. | 9,804,251  |            | Ps.                | 190,523,462 |            | (Ps.
|                              |                                                                                                                                                                 |     |            |                                                    |     |            |            |                    |             |            |     
|                              |                                                                                                                                                                 | US$ | 991,269    |                                                    | US$ | 950,715    |            | US$                | 18,475,002  |            | (US$
|                              |                                                                                                                                                                 |     |            |                                                    |     |            |            |                    |             |            |     

The accompanying notes are an integral part of these consolidated financial statements.

F-6

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES        CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION        FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
    (In thousands of pesos and thousands of U.S. dollars)  (Notes 1 and 2)

|                                                     |                                                                                                            | 2002                                                       |           | 2002       |           | 2001       |              | 2000       |            
|---------------------------------------------------- | ---------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------- | --------- | ---------- | --------- | ---------- | ------------ | ---------- | -----------
|Funds provided by (used in):                         |                                                                                                            |                                                            |           |            |           |            |              |            |            
|Operating activities:                                |                                                                                                            |                                                            |           |            |           |            |              |            |            
|Net loss for the year                                |                                                                                                            | (US$                                                       | 2,956,811 | )          | (Ps.      | 30,492,113 | )            | (Ps.       | 34,090,587 
|                                                     | Charges to operations not requiring the use of funds:                                                      |                                                            |           |            |           |            |              |            |            
|                                                     |                                                                                                            | Depreciation and amortization                              |           |            | 3,066,187 |            |              | 31,620,059 |            
|                                                     |                                                                                                            | Reserve for retirement payments, pensions and indemnities. |           |            | 3,600,953 |            |              | 37,134,827 |            
|                                                     |                                                                                                            | Specific oil-field exploration and depletion reserve       |           |            | 801,068   |            |              | 8,261,011  |            
|                                                     |                                                                                                            | Reserve for sundry creditors and others                    |           |            |           |            |              |            |            
|                                                     |                                                                                                            |                                                            |           |            |           |            |              |            |            
|                                                     |                                                                                                            |                                                            | 4,511,397 |            |           | 46,523,784 |              |            | 36,448,862 
|Variances in:                                        |                                                                                                            |                                                            |           |            |           |            |              |            |            
|                                                     | Accounts, notes receivable and other                                                                       |                                                            |           | (1,018,460 | )         |            | (10,502,873  | )          |            
|                                                     | Inventories                                                                                                |                                                            |           | (696,461   | )         |            | (7,182,255   | )          |            
|                                                     | Intangible asset derived from the actuarial computation of labor obligations and other assets              |                                                            |           | (1,376,152 | )         |            | (14,191,572  | )          |            
|                                                     | Suppliers                                                                                                  |                                                            |           | 559,190    |           |            | 5,766,651    |            |            
|                                                     | Accounts payable and accrued expenses                                                                      |                                                            |           | (164,339   | )         |            | (1,694,748   | )          |            
|                                                     | Taxes payable                                                                                              |                                                            |           | 2,344,563  |           |            | 24,178,304   |            |            
|                                                     | Reserve for sundry creditors and others                                                                    |                                                            |           | 14,659     |           |            | 151,172      |            |            
|                                                     | Reserve for retirement payments, pensions and indemnities                                                  |                                                            |           | 305,670    |           |            | 3,152,221    |            |            
|                                                     | Exploration and well-drilling expenses charged to the specific oil-field exploration and depletion reserve |                                                            |           | (631,578   | )         |            | (6,513,144   | )          |            
|                                                     |                                                                                                            |                                                            |           |            |           |            |              |            |            
|                                                     | Funds provided by operating activities                                                                     |                                                            |           | 3,848,489  |           |            | 39,687,540   |            |            
|                                                     |                                                                                                            |                                                            |           |            |           |            |              |            |            
|Financing activities:                                |                                                                                                            |                                                            |           |            |           |            |              |            |            
|                                                     | Minimum guaranteed dividends paid to the Mexican Government                                                |                                                            |           | (208,755   | )         |            | (2,152,789   | )          |            
|                                                     | Other equity movements                                                                                     |                                                            |           | 3,939      |           |            | 40,627       |            |            
|                                                     | Dividends paid to the Mexican Government Approved by the Board of Directors on May 9, 2000                 |                                                            |           |            |           |            |              |            |            
|                                                     | Notes payable to contractors                                                                               |                                                            |           | 1,366,903  |           |            | 14,096,183   |            |            
|                                                     | Debt                                                                                                       |                                                            |           | 7,867,033  |           |            | 81,128,776   |            |            
|                                                     | Sale of future accounts receivable                                                                         |                                                            |           | (120,894   | )         |            | (1,246,717   | )          |            
|                                                     |                                                                                                            |                                                            |           |            |           |            |              |            |            
|                                                     | Funds provided by (used in) financing activities                                                           |                                                            |           | 8,908,226  |           |            | 91,866,080   |            |            
|                                                     |                                                                                                            |                                                            |           |            |           |            |              |            |            
|Investing activities:                                |                                                                                                            |                                                            |           |            |           |            |              |            |            
|                                                     | Increase in fixed assets, net                                                                              |                                                            |           | (9,902,452 | )         |            | (102,119,038 | )          |            
|                                                     |                                                                                                            |                                                            |           |            |           |            |              |            |            
|                                                     | Funds used in investing activities                                                                         |                                                            |           | (9,902,452 | )         |            | (102,119,038 | )          |            
|                                                     |                                                                                                            |                                                            |           |            |           |            |              |            |            
|Net increase (decrease) in cash and cash equivalents |                                                                                                            |                                                            | 2,854,263 |            |           | 29,434,582 |              |            | (13,384,982
|Cash and cash equivalents at beginning of the year   |                                                                                                            |                                                            | 1,400,423 |            |           | 14,441,864 |              |            | 27,826,846 
|                                                     |                                                                                                            |                                                            |           |            |           |            |              |            |            
|Cash and cash equivalents at end of the year         |                                                                                                            | US$                                                        | 4,254,686 |            | Ps.       | 43,876,446 |              | Ps.        | 14,441,864 
|                                                     |                                                                                                            |                                                            |           |            |           |            |              |            |            

The accompanying notes are an integral part of these consolidated financial statements.

F-7

---



PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES        NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS  ENDED DECEMBER 31, 2002, 2001 AND 2000    
(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

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

Following 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 its four Subsidiary Entities (as defined below) are
decentralized public entities of the Federal Government of Mexico (the "Mexican Government") and together they comprise the Mexican state oil and gas company.

The
activities of Petróleos Mexicanos and Subsidiary Entities are regulated by the Constitución Política de los Estados Unidos Mexicanos
(Political Constitution of the United Mexican States), the Ley Reglamentaria del Artículo 27 Constitucional en el Ramo del Petróleo (the Regulatory Law to
Article 27 of the Political Constitution of the United Mexican States concerning Petroleum affairs, or the "Regulatory Law") effective November 30, 1958, as amended effective
May 12, 1995 and November 14, 1996, and the Ley 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 and January 16, 2002. 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 and
with the legal authority to own property and conduct business in their own names. The Subsidiary Entities are controlled by and have characteristics of subsidiaries of Petróleos
Mexicanos. The Subsidiary Entities are:



F-8

---



PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

The strategic activities entrusted to Petróleos Mexicanos and Subsidiary Entities by the Organic Law can be performed only by
Petróleos Mexicanos and Subsidiary Entities 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:



At
their formation, Petróleos Mexicanos assigned to the Subsidiary Entities all the assets and liabilities needed to carry out these activities, which 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. There was no change in the carrying value of assets and liabilities upon their contribution by
Petróleos Mexicanos to the Subsidiary Entities.

The
principal distinction between Subsidiary Entities and Subsidiary Companies (as defined below) is that Subsidiary Entities are decentralized public entities created by
Article 3 of the Organic Law, 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 general corporations law, in their respective jurisdictions.

F-9

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

As used herein, "Subsidiary Companies" are defined as (a) those companies which are not Subsidiary Entities but in which Petróleos Mexicanos
has greater than a 50% ownership investment, and (b) the Pemex Project Funding Master Trust (the "Master Trust"), a Delaware statutory trust controlled by Petróleos Mexicanos.
"Non-consolidated subsidiary companies", as used herein, are defined as those companies which are (a) not Subsidiary Entities or Subsidiary

Companies
and (b) in which Petróleos Mexicanos has less than a 50% ownership interest. Petróleos Mexicanos, the Subsidiary Entities and the
Subsidiary Companies are referred to as "PEMEX".

2. Significant 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 Instituto Mexicano de Contadores Públicos (Mexican Institute of Public Accountants, or "MIPA") 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's Office ("SFP").

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
January 2003, the SHCP informed PEMEX that, beginning in 2003, PEMEX will recognize the effects of inflation in accordance with NIF-06 "A" Section C, which
establishes the obligation for PEMEX to adopt Bulletin B-10, "Recognition of the Effects of Inflation on Financial Information" ("Bulletin B-10"). PEMEX is currently evaluating
the impact that the adoption of Bulletin B-10 will have on its consolidated financial statements. This adoption will not impact PEMEX's financial statements for the fiscal year ended
December 31, 2002.

F-10

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

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 assets under construction and assets held for disposal, are not restated.

The
main differences between Mexican GAAP Bulletin B-10 and NIF-06 BIS "A" Section A are described below. A summary of the significant differences between
those two standards is presented in Note 15.



F-11

---



PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)



c) Consolidation

The consolidated financial statements include the accounts of Petróleos Mexicanos, the Subsidiary Entities and the Subsidiary Companies. All
significant 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. ("PMI NASA"); 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 International, Ltd.; and the Master Trust.

Certain
investments in Subsidiary Companies and other non-consolidated subsidiary companies, due to their immateriality in relation to PEMEX's total assets and revenue, 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 to Entidades 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.

F-12

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

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 two years to be recorded to the accounting records for statutory purposes. For the purposes of these financial statements and in accordance with Mexican GAAP consolidation principles, all
the accounts related to PIDIREGAS were incorporated into the consolidated financial statements at December 31, 2002 and 2001, i.e., all effects of NIF-09-A are excluded.

The
main objective of the Master Trust is to administer financial resources related to PIDIREGAS, such financial resources having been designated by PEMEX for that purpose. The Master
Trust is consolidated in the financial statements in accordance with the 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, as described below. Accumulated drilling costs corresponding to successful oil wells are capitalized with a credit to 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 oil and gas is
extracted from existing wells, the equity reserve is increased based upon a calculated exploration and drilling cost per barrel, with a corresponding amount being charged to cost of sales. Exploration
and drilling costs are charged against this reserve as incurred. Accumulated drilling costs related to successful wells are capitalized as fixed assets and a corresponding amount is added back to
re-establish the reserve. PEMEX determines the budgeted exploration and drilling cost per barrel based upon engineering studies. During 2002 and 2001, PEMEX maintained the cost per barrel
of 5.48 pesos.

g) Inventory valuation

Inventories are valued as follows:



F-13

---



PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)



h) Properties

PEMEX's assets are initially recorded at acquisition or construction cost. Exchange losses arising from the impact of exchange rate fluctuations on the 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 2 b)), the book values
of these accounts are restated annually. 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 income. 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 the field's total
proven and probable reserves.

F-14

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

The Reglamento de Trabajos Petroleros ("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
adequate 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.

Estimated
dismantlement and abandonment costs are taken into account in determining amortization and depreciation rates. PEMEX recognizes the costs related to currently producing and
temporarily closed wells based on the UOP method. 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. All estimates are based on the life of the field, and take into consideration current cost estimates on an undiscounted basis. No salvage value is considered when
determining such rates because salvage values have traditionally been zero. The estimated dismantlement and abandonment costs are reflected within accumulated depreciation and amortization.

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 the SHCP. As described in
Note 2 h), 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 the cost of fixed assets. During 2002, exchange losses of Ps. 4,569,508 were capitalized as part of fixed asset costs; during 2001, no exchange
losses related to these assets were capitalized, as PEMEX recorded exchange gains on its foreign currency denominated debt; during fiscal year 2000, exchange losses of Ps. 139,692 were capitalized as
part of fixed asset costs. Foreign exchange losses, which are not capitalized, and all foreign exchange gains, are charged and credited, respectively, to income of Ps. 425,849, Ps. 3,891,701, and Ps.
876,736 in 2002, 2001 and 2000, respectively.

F-15

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

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
upon the projected unit-credit method. PEMEX has recorded the results of the actuarial valuation in accordance with Mexican GAAP Bulletin D-3, "Labor Obligations," except that,
due to the recognition 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 income as 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 internally-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 the depreciation and amortization expense associated with assets used in operations as
well as the expense associated with the reserve for future dismantlement and abandonment costs.

l)     Taxes and federal duties

Petróleos Mexicanos and the Subsidiary Entities are subject to special tax laws, which are based upon petroleum revenues and do not generate
temporary differences or deferred income taxes. Petróleos Mexicanos and the Subsidiary Entities are not subject to the Ley del Impuesto Sobre la Renta ("Income Tax Law") or the Ley 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 income taxes.

Petróleos
Mexicanos and the Subsidiary Entities are subject to the following duties and taxes: Hydrocarbon Extraction Duties, Hydrocarbon Income Tax and the Special Tax on
Production and Services ("IEPS Tax"). Petróleos Mexicanos and the Subsidiary Entities are also subject to the Value Added Tax ("VAT").

F-16

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

Hydrocarbon
extraction duties are calculated at a rate of 52.3% on the net cash flow 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 Petróleos Mexicanos and the Subsidiary Entities are not subject; this rate was 35% for all periods presented.

The
sum of the above duties and taxes must equal 60.8% of Petróleos Mexicanos and the Subsidiary Entities' 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. $15.50, U.S. $18.00 and U.S. $15.00 per barrel for 2002, 2001 and 2000, 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 special tax on production and services 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 the respective product is sold. For financial statement purposes, the special tax on production and services
collected from customers is presented as part of "Net domestic sales" and the payment to the Government is 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. In
the case of 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 loss and ownership is transferred at the delivery point, and PEMEX records sales revenue upon delivery.

o)    Financial instruments

PEMEX enters into derivative financial instruments to manage its exposures to foreign currency risk, interest rate risk, oil and natural gas price risk,
counterparty risk and investment portfolio risk. Derivative financial instruments designated as hedge instruments are recorded in the balance sheet and valued using the same valuation criteria used to
value the hedged asset or liability. Derivative

F-17

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

financial
instruments not designated as hedge instruments are recorded at fair value. Subsequent fair value adjustments are reflected in the statement of operations.

As
a result of the adoption of Bulletin C-2, "Financial Instruments" ("Bulletin C-2") as of January 1, 2001, PEMEX recognized a charge to earnings
totalling Ps. 1,331,247 which has been reflected as a cumulative effect of adopting a new accounting standard. The adjustment was primarily the result for the accounting for the equity swap related to
Repsol YPF, S.A. ("Repsol") shares (see additional discussion in Note 10). As more fully described in Note 10, PEMEX has four outstanding equity swaps involving Repsol shares. As
Bulletin C-2 has no provision for hedging forecasted transactions, nor does it permit the equity swap to be treated as a hedge since the Repsol shares were considered to have been sold for
Mexican GAAP purposes in prior years, the entire fair value at January 1, 2001 related to the equity swaps, which totalled Ps. 1,241,514 was recognized as part of the cumulative effect
adjustment. The remainder of the cumulative effect adjustment related to interest rate and cross currency swaps entered into to hedge 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 a "highly effective" financial hedge.

p)    Use of estimates

The 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.

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 recorded in the financial statements.

q)    Comprehensive loss

Comprehensive loss is represented by the net loss plus the effect of restatement, the net increase in the specific oil-field exploration and depletion
reserve, and items required by specific accounting standards to be reflected in equity but which do not constitute contributions, reductions or distributions (see Note 12).

F-18

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

r)     Convenience translation

United
States dollar ("U.S. dollar") amounts shown in the balance sheets, the statements of operations, the statements of changes in equity 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 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.

s)     Reclasifications

Certain reclassifications have been made to 2001 and 2000 amounts presented in the consolidated financial statements and related notes to conform such amounts and
disclosures to the current year presentation.

t)     Recently issued accounting standards

In November 2001, MIPA issued revised Bulletin C-9, "Liabilities, Provisions, Contingent Assets and Liabilities and Commitments" ("Bulletin
C-9"), which supersedes existing Bulletin C-9, "Liabilities", and Bulletin C-12, "Contingencies and Commitments".

Bulletin
C-9 establishes a methodology for valuation, presentation and disclosure of liabilities and provisions, as well as for valuation and disclosure of contingent assets
and liabilities, and for disclosure of commitments. Among other things, Bulletin C-9 establishes guidelines for the recognition of liabilities and non-recognition of
liabilities in the event of extinguishments, restructurings or conversion to equity. In addition, in the case of provisions, it introduces the concept of discounting long-term provisions.
With respect to contingent liabilities, Bulletin C-9 states that all contingent liabilities that have a probable realization must be accounted for and disclosed in the financial
statements; contingent liabilities that have a possible realization cannot be accounted for in the financial statements, but must be disclosed; and contingent liabilities that have a remote
realization cannot be accounted for in the financial statements and are not required to be disclosed. Bulletin C-9 requires disclosure of committed amounts when they represent significant
fixed asset additions, contracted services and goods that exceed immediate needs or if the commitment is considered a contracted obligation. The provisions of Bulletin C-9 became effective
beginning January 1, 2003. Management is currently evaluating the impact that the adoption of Bulletin C-9 will have on its consolidated financial statements.

F-19

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

In
December 2001, the MIPA issued Bulletin C-8, "Intangible Assets" ("Bulletin C-8"), which defines intangible assets as costs incurred and rights or
privileges acquired that will generate a future economic benefit. Bulletin C-8 provides a clear definition of research and development costs, requiring that only development costs may be
deferred to a future period. Furthermore, Bulletin C-8 states that preoperating costs should be expensed as a period cost, unless they could be classified as development costs. Bulletin
C-8 requires that intangible assets with indefinite useful lives, including previously existing intangible assets, should not be amortized, but should be tested for impairment annually.
Intangible assets with finite useful lives should be amortized over their useful lives. The provisions of Bulletin C-8 become effective beginning January 1, 2003. Management is
currently evaluating the impact that the adoption of Bulletin C-8 will have on its consolidated financial statements.

MIPA
issued Bulletin C-15, "Impairment and Disposal of Long-Lived Assets", ("Bulletin C-15"), which will be effective as of January 1, 2004,
although early adoption is recommended. Bulletin C-15 provides specific criteria in determining when there is an impairment in the value of long-lived assets, for both tangible
and intangible assets. Furthermore, Bulletin C-15 establishes a methodology for calculating and recording losses arising from the impairment of assets and their reversal. Also, Bulletin
C-15 provides guidance as to presentation and disclosure in the case that there is subsequent reversal of the impairment. In addition, Bulletin C-15 provides guidance for the
accounting, presentation and disclosure for discontinued operations. The Company is currently evaluating the impact that adoption of this statement will have on its consolidated financial statements.

3.     Accounts, notes receivable and other

Accounts, notes receivable and other amounts are as follows:

2002

2001Trade-domestic

Ps.
23,809,858

Ps.
19,757,188Trade-foreign


6,971,754


4,707,899Pemex Finance, Ltd


7,481,944


6,576,272Mexican Government (Note 13) advance payments on minimum guaranteed dividends


9,712,028


2,152,788Other accounts receivable


9,308,546


12,933,575Less: allowance for doubtful accounts


(1,911,830
)

(1,258,295
)Ps.
55,372,300

Ps.
44,869,427


F-20

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

4.     Inventories

At December 31, 2002 and 2001, inventories are as follows:

2002

2001Crude oil, refined products, derivatives and petrochemical products

Ps.
21,039,871

Ps.
14,018,513Materials and supplies in stock


4,485,787


4,205,193Materials and products in transit


942,053


981,580Less: allowance for slow-moving inventory and obsolescence reserve


(2,062,742
)

(1,982,572
)Ps.
24,404,969

Ps.
17,222,714


5.     Properties and equipment

The components of this caption, net of accumulated depreciation and amortization, are as follows:

2002

2001Land

Ps.
36,533,854

Ps.
34,637,920Buildings


14,095,394


14,863,887Wells and field assets


62,526,201


65,994,431Plants, furnishings and equipment


208,275,760


201,644,888Offshore platforms


24,800,889


24,205,124346,232,098


341,346,250Fixed assets pending disposition


370,792


287,950Construction spares


178,077


223,142Construction in progress


139,317,002


65,055,924Total

Ps.
486,097,969

Ps.
406,913,266


F-21

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

6.     Intangible asset derived from the actuarial computation of labor obligations and other assets

As of December 31, 2002 and 2001, the intangible and other assets amount consists of:

2002

2001Intangible asset derived from the actuarial computation of labor obligations (Note 11)

Ps.
72,690,782

Ps.
59,060,585Long-term investments and other assets


14,936,767


14,375,392Ps.
87,627,549

Ps.
73,435,977


Included in long-term investments are 18,557,219 shares in Repsol which are held by Petróleos Mexicanos and not under
any equity swap arrangement (see Note 10). The carrying value at December 31, 2002 and 2001 was Ps. 4,442,970 and Ps. 3,594,914, respectively.

F-22

---



PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES        NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS  ENDED DECEMBER 31, 2002, 2001 AND 2000    
(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

PMI NASA 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. 2,347,115 and Ps. 2,478,969, respectively, at December 31, 2002 and 2001. During 2002, 2001 and 2000, PEMEX recorded (Ps. 245,844), Ps.
530,949 and Ps. 498,983 of (losses) earnings, respectively, relative to its interest in the joint venture which has been reflected in the line item "Other revenues" in the statements of operations.
During 2002, 2001 and 2000 PEMEX paid the joint venture Ps. 2,515,511, Ps. 3,717,666 and Ps. 3,217,047 respectively, for the processing of petroleum. During 2000 PEMEX, through its subsidiary company,
PMI NASA, paid Ps. 15,768 to the joint venture under the terms of the contract which calls for contributions from PMI NASA based upon the refinery's operating margin. In July 2000, the above
noted contract was modified retroactively respective to the contribution on the refining operating margin; the amounts presented are as revised per the modified contract.

Long-term
investments also include PEMEX's 46.85% investment in Mexicana de Lubricantes, S.A. de C.V. ("MexLub") an associated company. During 2002, PEMEX decided to create a
valuation allowance over the investment of MexLub of Ps. 514,079. At December 31, 2002 and 2001, this investment (net) amounted to Ps. 129,317 and Ps. 642,619, respectively.

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 current
and future accounts receivables sold are those generated or to be 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 (see Note 2 d)). At December 31, 2002 and 2001, the sales under these agreements were Ps. 43,438,885 and Ps. 44,685,602, respectively.

"Sale
of future accounts receivable" relates to the purchase of rights to certain accounts receivable that will be generated based on existing commitments and is therefore treated as a
liability to PEMEX. Sale of future accounts receivable has been classified as a long-term liability as of December 31, 2002 and 2001. 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

F-23

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PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES        NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS  ENDED DECEMBER 31, 2002, 2001 AND 2000    
(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

repayments
as the agreements do not bear a re-financing risk. Pemex Finance has a 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, 2002 and 2001, the notes payable to contractors consisted of:

|                                                      |  | 2002           |  | 2001          
|----------------------------------------------------- |  | -------------- |  | --------------
|Total notes payable to contractors (a) (b) (c)        |  | Ps. 28,996,948 |  | Ps. 14,900,765
|Less: Current portion of notes payable to contractors |  | 1,577,543      |  | 1,256,395     
|                                                      |  |                |  |               
|Notes payable to contractors (long-term)              |  | Ps. 27,419,405 |  | Ps. 13,644,370
|                                                      |  |                |  |               



F-24

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES        NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS  ENDED DECEMBER 31, 2002, 2001 AND 2000    
(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

9.     Debt

As of December 31, 2002, PEMEX had Ps. 20,757,170 in lines of credit bearing various interest rates. As of December 31, 2002, the unused portion of
the lines of credit was Ps. 4,662,830.

During
2002, significant financing operations were as follows:



F-25

---



PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES        NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS  ENDED DECEMBER 31, 2002, 2001 AND 2000    
(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

During 2002, the Master Trust undertook the following financing activities:



F-26

---



PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES        NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS  ENDED DECEMBER 31, 2002, 2001 AND 2000    
(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

During 2001, the following debts were contracted by PEMEX:



F-27

---



PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES        NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS  ENDED DECEMBER 31, 2002, 2001 AND 2000    
(Amounts expressed in thousands of pesos and thousands of U.S. dollars)



The
Master Trust contracted the following debt during 2001:



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 including 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 2006.

F-28

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES        NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS  ENDED DECEMBER 31, 2002, 2001 AND 2000    
(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

Each year, SHCP approves Petróleos Mexicanos and Subsidiary Entities' annual budget and its annual financing program. The Mexican Government
incorporates Petróleos Mexicanos and Subsidiary Entities' annual budget and annual financing program into the budget of the Mexican Government, which the Federal Congress 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"),
Petróleos Mexicanos and Subsidiary Entities' 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.

Various
credit facilities require compliance with various operating covenants which, among other things, place restrictions on the following types of transactions:



As
of December 31, 2002 and 2001, long-term debt was as shown in the following page.

F-29

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PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS  ENDED DECEMBER 31, 2002, 2001 AND 2000    (Amounts
expressed in thousands of pesos and thousands of U.S. dollars)

|                                            |  |                                                            |  |                 |  | December 31, 2002 |             | December 31, 2001
|------------------------------------------- |  | ---------------------------------------------------------- |  | --------------- |  | ----------------- | ----------- | -----------------
|
|
|U.S. dollars:                               |  |                                                            |  |                 |  |                   |             |                  
|Unsecured loans(1)                          |  | Domestic and LIBOR plus 0.8125                             |  | Various to 2006 |  | Ps.               | 2,278,586   |                  
|Unsecured loans                             |  | Domestic and LIBOR plus 0.625 to 0.95                      |  | Various to 2006 |  |                   | 9,787,809   |                  
|Acceptance lines                            |  | LIBOR plus 0.6%                                            |  | 2003            |  |                   | 8,095,313   |                  
|Bonds                                       |  | Various from 6.5% to 9.5% and LIBOR plus 1.5               |  | Various to 2027 |  |                   | 99,497,475  |                  
|Financing assigned to PIDIREGAS             |  | Various from 5.31% to 7.69% and LIBOR plus 0.2% to 2.25%   |  | Various to 2013 |  |                   | 57,824,572  |                  
|Purchasing loans and project financing      |  | Various from 2.6% to 7.77% and LIBOR plus 0.0625% to 2.00% |  | Various to 2011 |  |                   | 4,413,561   |                  
|Leasing contracts                           |  | Various from 8.05% to 10.21%                               |  | Various to 2003 |  |                   | 2,873,677   |                  
|Commercial paper                            |  | Various from 1.345% to 1.42%                               |  | Various to 2003 |  |                   | 4,460,156   |                  
|External trade loans                        |  | LIBOR plus 0.55% to 0.65%                                  |  | Various to 2003 |  |                   | 2,320,312   |                  
|Others                                      |  | Various from 8.2725% to 10.10%                             |  | Various to 2008 |  |                   |             |                  
|Bank loans                                  |  | Fixed of 2.2345%                                           |  | 2003            |  |                   | 103,600     |                  
|                                            |  |                                                            |  |                 |  |                   |             |                  
|Total financing denominated in U.S. dollars |  |                                                            |  |                 |  |                   | 191,655,061 |                  
|                                            |  |                                                            |  |                 |  |                   |             |                  
|Euros:                                      |  |                                                            |  |                 |  |                   |             |                  
|Euro bonds                                  |  | Fixed rate 7.75% and LIBOR plus 1.65%                      |  | Various to 2008 |  |                   | 14,566,367  |                  
|Unsecured loans                             |  | Domestic and LIBOR plus 0.8125 to 2.00                     |  | Various to 2016 |  |                   | 86,357      |                  
|                                            |  |                                                            |  |                 |  |                   |             |                  
|                                            |  |                                                            |  |                 |  |                   | 14,652,724  |                  
|Pesos:                                      |  |                                                            |  |                 |  |                   |             |                  
|Project financing                           |  | Various from 8.3% to 8.13%                                 |  | 2004 and 2005   |  |                   | 11,500,000  |                  
|                                            |  |                                                            |  |                 |  |                   |             |                  
|Japanese yen:                               |  |                                                            |  |                 |  |                   |             |                  
|Bonds                                       |  | Interest rate of 3.5%                                      |  | 2023            |  |                   | 2,607,000   |                  
|Project financing                           |  | From 1.6% to 6.6% and Prime in yen                         |  | Various to 2015 |  |                   | 14,689,116  |                  
|                                            |  |                                                            |  |                 |  |                   |             |                  
|                                            |  |                                                            |  |                 |  |                   | 17,296,116  |                  
|Other currencies(2)                         |  |                                                            |  | Various to 2016 |  |                   | 2,087,567   |                  
|                                            |  |                                                            |  |                 |  |                   |             |                  
|Total principal in pesos(3)                 |  |                                                            |  |                 |  |                   | 237,191,468 |                  
|Plus: Accrued interest                      |  |                                                            |  |                 |  |                   | 3,353,409   |                  
|                                            |  |                                                            |  |                 |  |                   |             |                  
|Total principal and interest                |  |                                                            |  |                 |  |                   | 240,544,877 |                  
|Less: Short-term maturities                 |  |                                                            |  |                 |  |                   | 49,496,895  |                  
|                                            |  |                                                            |  |                 |  |                   |             |                  
|Long-term debt                              |  |                                                            |  |                 |  | Ps.               | 191,047,982 |                  
|                                            |  |                                                            |  |                 |  |                   |             |                  

|                                   |  | 2003 |            | 2004 |     | 2005       |  | 2006 |            | 2007 |     | 2008 and
thereafter |  | Total
|---------------------------------- |  | ---- | ---------- | ---- | --- | ---------- |  | ---- | ---------- | ---- | --- | ------------------- |  | -----
|Maturities (in thousands of pesos) |  | Ps.  | 46,143,486 |      | Ps. | 24,765,082 |  | Ps.  | 32,286,139 |      | Ps. | 18,054,222          |  | Ps.  
|                                   |  |      |            |      |     |            |  |      |            |      |     |                     |  |      

F-30

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PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES        NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS  ENDED DECEMBER 31, 2002, 2001 AND 2000    
(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

Notes
to table:

10.   Financial instruments

During the normal course of business, PEMEX is exposed to foreign currency risk, interest rate risk, commodity price risk, counterparty risk and investment
portfolio risk. These risks create volatility in earnings, equity, and cash flows from period to period. PEMEX makes use of derivative instruments in various strategies to eliminate or limit many of
these risks.

PEMEX
has enacted general risk management guidelines for the use of derivative instruments, which form a comprehensive framework for PEMEX. Each subsidiary entity using
derivatives has also adopted industry-specific risk management guidelines to manage the appropriate risks arising from their respective activities. The subsidiary entities' guidelines operate within
the general risk management framework of PEMEX.

The
Risk Management Committee of PEMEX, comprised of representatives of PEMEX, the Central Bank of Mexico, SHCP, and PMI, authorizes PEMEX's hedging strategies and submits the risk
management policies for the approval of the Board of Directors of Petróleos Mexicanos (the "Board of Directors").

During
2001, the Board of Directors 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 PEMEX and to establish institutional regulations consistent with a consolidated risk management approach.

F-31

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES        NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS  ENDED DECEMBER 31, 2002, 2001 AND 2000    
(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

(i) 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 is to customers whose activities are related to the gas industry, including some who are located in foreign countries (primarily the United States). To monitor this risk, PEMEX has
established an internal credit committee to monitor credit policies and procedures. 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.

(ii) Counterparty risk from the use of derivative financial instruments

PEMEX is exposed to credit (or repayment) risk and market risk through the use of derivative instruments. If the counterparty fails to fulfill its performance
obligations under a derivative contract,
PEMEX's credit risk will equal the positive fair value of the derivative. Currently, when the fair value of a derivative contract is positive, this indicates that the counterparty owes PEMEX, thus
creating a repayment risk for PEMEX. When the fair value of a derivative contract is negative, PEMEX owes the counterparty and, therefore, assumes no repayment risk.

In
order to minimize the credit risk in derivative instruments, PEMEX enters into transactions with high quality counterparties, which include financial institutions and commodities
exchanges that satisfy PEMEX's established credit approval criteria. Normally, these counterparties have higher credit standing than that of PEMEX.

Derivative
transactions are generally executed on the basis of standard agreements. In general, collateral for financial derivative transactions are neither provided nor received.
However in energy derivatives transactions, counterparties require collateral when the negative fair value of the position exceeds the credit threshold.

(iii) Interest rate risk management

PEMEX's interest rate risk hedging strategy allows the volatility of the financial risk to be reduced in the operating cash flows of PEMEX for the
long-term debt commitments and guaranteed minimum dividends. Interest rate derivatives allow PEMEX to contract long-term loans to be contracted at fixed or variable rates and
to select the appropriate mix of the debt at variable versus fixed rates.

F-32

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PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES        NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS  ENDED DECEMBER 31, 2002, 2001 AND 2000    
(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

Interest
rate hedging strategies have permitted PEMEX to effectively change the characteristics of its liabilities. At December 31, 2002, the effective interest rate on
approximately 57% (60% in 2001) of PEMEX's debt is at a fixed rate, contracted directly or by using derivatives instruments.

Derivative
financial instruments used in PEMEX's hedging transactions primarily consist of (i) fixed interest rate swaps, under which PEMEX is eligible to receive payments
generally based on the three month and six month LIBOR interest rate, and to a lesser degree, (ii) options on interest rate caps to establish an interest rate ceiling.

(iv) Exchange rate risk management

As a currency exchange rate risk hedging policy, PEMEX contracts cross-currency swaps in order to hedge against adverse changes in currency exchange rates.

Since
a significant amount of PEMEX's revenues is denominated in U.S. dollars, PEMEX generally contracts loans in U.S. dollars. However, PEMEX also contracts debt in currencies other
than the U.S. dollar to take advantage of the financing terms available in these foreign currencies. PEMEX has historically contracted cross-currency swaps as a hedging strategy against market
exposure due to the depreciation of the U.S. dollar. These foreign currency financial derivatives have been established to translate the amounts relative to various bonds issued in other currencies
into U.S. dollars.

In
December 2002, PEMEX entered into a cross-currency swap with a termination date in 2023 to hedge its exposure in Japanese yen. Given the long-term nature of this
obligation, the swap used to hedge this risk includes an option to rescind the contract linked to a defined set of credit default events by PEMEX. In case such an event occurs, the swap terminates
without any additional obligation to any of the parties. This swap has a notional amount of U.S. $241.4 million and accounts for 5.7% of the total outstanding cross-currency swap position.

(v) Commodity price risk management

Crude oil:

PEMEX's
exports and domestic sales are related to international hydrocarbon prices, thus exposing PEMEX to fluctuations in international markets. PEMEX shares this risk with the Mexican
Government through its current fiscal regime. Currently, PEMEX does not enter into any long-term hedge against fluctuations in crude oil prices. However, in order to lessen the
effect of a decline in hydrocarbon prices, since 1998, the Mexican Government, along with PEMEX, agreed to reduce the volume of crude oil exports in conjunction with the major international oil
producers to improve

F-33

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES        NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS  ENDED DECEMBER 31, 2002, 2001 AND 2000    
(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

international
oil prices. Notwithstanding, during December 2002 PEMEX entered into a short-term crude oil price hedge through the use of options for approximately 6% of the PEMEX
total production.

Petroleum
products:

PEMEX
balances its overall petroleum product supply and demand through PMI Trading Ltd., managing only those exposures associated with the immediate operational program. To this
end, PEMEX uses the full range of conventional oil price-related financial and commodity derivatives available in the oil markets. PEMEX's benchmark for petroleum product commercial activities is the
prevailing market price.

Natural
gas:

As
part of the Mexican Government's policy of promoting economic growth, SHCP, the Ministry of Economy, the Ministry of Energy and PEMEX announced a natural gas pricing program on
January 2001 for certain industrial consumers of natural gas in Mexico. Under this program, Mexican industrial consumers that hold outstanding natural gas price hedging instruments may enter
into a three-year agreement with PEMEX to purchase natural gas from PEMEX at a fixed reference price of 4.00 U.S. dollars per million BTUs. PEMEX entered into a number of such contracts in
2001. Participation by the industrial consumers in the program was optional.

As
part of PEMEX's risk management strategy, PEMEX has entered into a number of derivative instruments, primarily swaps and futures, for hedging purposes. These instruments are designed
to unlock the fixed price sales under the three-year agreements, while locking in a profit margin, and were entered into 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 leaves PEMEX 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 fix-price contracts. This basis risk is treated as an inefficiency of
the transaction and may impact PEMEX's earnings in a period other than the one during which the transaction may be realized.

(vi) Investment portfolio risk management

PEMEX currently holds four equity swaps with respect to shares of Repsol. In 1994, PEMEX entered into an equity swap, which was restructured in March 2000,
resulting in a swap with respect to 26,427,781 Repsol shares. These equity swaps were divided into three tranches, having one to three-year maturities. Upon the maturity of the first two
tranches, PEMEX has entered into three-month swaps for such shares. In addition, in January 2000, PEMEX entered into a second equity

F-34

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES        NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS  ENDED DECEMBER 31, 2002, 2001 AND 2000    
(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

swap
with respect to 13,679,704 Repsol shares maturing in three years. As of December 31, 2002 the market value of the Repsol shares was U.S. $13.22 per share.

(vii) Fair value of derivative financial instruments

The fair value of derivative instruments is sensitive to movements in the underlying market rates and variables. PEMEX monitors the fair value of derivative
financial instruments on a periodic basis. The fair value of foreign currency, commodity and interest rate financial derivatives is monitored on a periodic basis ranging from daily to at least
quarterly. Fair values are calculated for each derivative financial instrument, which is the price at which one party would assume the rights and duties of another party. Fair values of financial
derivatives have been calculated using common market valuation methods with reference to available market data as of the balance sheet date.

The
following is a summary of the methods and assumptions for the valuation of utilized derivative financial instruments.



F-35

---



PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

The following table indicates the types of current swaps, their notional amount and fair value at December 31, 2002 and 2001.

|                    |  | 2002 |           | 2001 |     
|------------------- |  | ---- | --------- | ---- | ----
|
|Interest rate swaps |  | Ps.  | 4,166,863 |      | (Ps.
|Equity swaps        |  |      | 6,589,202 |      |     

The following table indicates the type of cross-currency swaps and their respective fair values at December 31, 2002 and 2001.

|                               |  | 2002 |            | 2001 |     
|------------------------------ |  | ---- | ---------- | ---- | ----
|
|Italian lire to U.S. dollars   |  |      |            |      |     
|British pounds to U.S. dollars |  | Ps.  | 2,023,570  |      | Ps. 
|Japanese yens to U.S. dollars  |  |      | 15,107,246 |      |     
|Euro to U.S. dollars           |  |      | 14,402,316 |      |     
|                               |  |      |            |      |     
|                               |  | Ps.  | 31,533,132 |      | (Ps.
|                               |  |      |            |      |     

The following table indicates the commodity derivative instruments, and their fair value at December 31, 2002 and 2001 in thousands of U.S.
dollars.

|        |  | 2002
Fair value |         | 2001
Fair value |     
|------- |  | --------------- | ------- | --------------- | ----
|Swaps   |  | US$             | 166,234 |                 | (US$
|Options |  |                 | (8,781  | )               |     
|Futures |  |                 | (3,649  | )               |     

---

Note: Fair value of derivative financial instruments presented in the previous schedules are presented for information purposes only.

F-36

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

Fair value of financial instruments other than derivatives

The
estimated fair value of financial instruments other than derivatives, for which it is practicable to estimate that value, as of December 31, 2002 and 2001 are as follows:

|             |                                         | 2002 |                | 2001
|------------ | --------------------------------------- | ---- | -------------- | ----
|
|Assets:      |                                         |      |                |     
|             | Cash and cash equivalents               |      | Ps. 43,876,446 |     
|             | Accounts receivable, notes and other    |      | 55,372,300     |     
|Liabilities: |                                         |      |                |     
|             | Suppliers                               |      | Ps. 29,270,622 |     
|             | Accounts payable                        |      | 6,731,832      |     
|             | Sale of future accounts receivable      |      | 43,438,885     |     
|             | Taxes payable                           |      | 26,693,674     |     
|             | Short-term debt                         |      | 49,496,895     |     
|             | Notes payable to contractors short-term |      | 1,577,543      |     
|             | Notes payable to contractors long-term  |      | 27,419,405     |     
|             | Long-term debt                          |      | 191,047,982    |     

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.

11.   Reserve for Retirement Payments, Pensions and Seniority Premiums

PEMEX has labor obligations for seniority premiums and pensions, according to regulations established by the Ley 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 the number of years of service. PEMEX has established a reserve for retirement and seniority premium benefits, determined by independent
actuaries. The reserve is calculated by independent third party actuaries using the projected unit-

F-37

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

credit
method. The net cost of the plan recorded in the consolidated statements of operations amounted to Ps. 37,134,827, Ps. 33,849,168 and Ps. 29,901,504 in 2002, 2001, and 2000,
respectively.

The
amount of benefits projected for pensions and seniority premiums, determined by independent actuaries, is as follows:

|                                                                                                                                    |  | 2002            |  | 2001           
|----------------------------------------------------------------------------------------------------------------------------------- |  | --------------- |  | ---------------
|Obligation for current benefits                                                                                                     |  | Ps. 219,859,863 |  | Ps. 178,379,613
|Additional amount for projected benefits                                                                                            |  | 48,806,731      |  | 46,155,618     
|                                                                                                                                    |  |                 |  |                
|Projected benefits obligation                                                                                                       |  | 268,666,594     |  | 224,535,231    
|Less:                                                                                                                               |  |                 |  |                
|Plan assets (trust funds)                                                                                                           |  | 6,603,230       |  | 5,803,396      
|                                                                                                                                    |  |                 |  |                
|                                                                                                                                    |  | 262,063,364     |  | 218,731,835    
|Transition liability to be amortized over the following 5 years, actuarial gains or losses, prior service costs and plan amendments |  | 121,435,594     |  | 104,760,916    
|                                                                                                                                    |  |                 |  |                
|Net projected liability                                                                                                             |  | 140,627,770     |  | 113,970,919    
|Additional minimum liability                                                                                                        |  | 72,690,782      |  | 59,060,585     
|                                                                                                                                    |  |                 |  |                
|Accumulated obligation                                                                                                              |  | Ps. 213,318,552 |  | Ps. 173,031,504
|                                                                                                                                    |  |                 |  |                

Actuarial assumptions used in the calculation of net seniority premium and pension plan cost for the years 2002 and 2001, are the following:

Expected long-term rate of return on assets

12
%Discount rate

11
%Rate of increase in compensation levels

7
%


F-38

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

12.   Comprehensive loss

Comprehensive loss for the years ended December 31, 2002, 2001 and 2000 is analyzed as follows:

|                                                                     |  | 2002 |            | 2001 |      | 2000       |  
|-------------------------------------------------------------------- |  | ---- | ---------- | ---- | ---- | ---------- | -
|Net loss for the year                                                |  | (Ps. | 30,492,113 | )    | (Ps. | 34,090,587 | )
|Effect of restatement in the yearNet                                |  |      | 8,685,724  |      |      | 7,783,568  |  
|Net increase in specific oil-field exploration and depletion reserve |  |      | 1,747,867  |      |      | 3,587,309  |  
|Other equity movements(1)                                            |  |      | 40,627     |      |      | 544,370    |  
|                                                                     |  |      |            |      |      |            |  
|Comprehensive loss for the year                                      |  | (Ps. | 20,017,895 | )    | (Ps. | 22,175,340 | )
|                                                                     |  |      |            |      |      |            |  

---

13.   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. The capitalization agreement between Petróleos Mexicanos and the Mexican Government stipulates
that the Certificates of Contribution "A" constitute permanent capital.

As
a condition of this capitalization, Petróleos Mexicanos agreed to pay a minimum guaranteed dividend 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 SHCP agreed upon a corresponding reduction in the future payments of the minimum guaranteed dividend.

F-39

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

During 2002, Petróleos Mexicanos paid Ps. 9,712,028 (Ps. 2,152,788 during 2001) 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 the total annual dividend, which is usually in the following fiscal year.

14.   Foreign Currency Position

PEMEX has the following assets and liabilities denominated in foreign currencies, which are stated in pesos at the exchange rate prevailing at December 31,
2002 and 2001:

|                                                              |  | Amounts in foreign currency
(Thousands) |  |             |  |              |  
|------------------------------------------------------------- |  | --------------------------------------- |  | ----------- |  | ------------ | -
|
|2002:                                                         |  |                                         |  |             |  |              |  
|U.S. dollars                                                  |  | 12,969,633                              |  | 32,372,228  |  | (19,402,595  | )
|                                                              |  |                                         |  |             |  |              |  
|Japanese yen                                                  |  | 102,593,907                             |  | 204,882,010 |  | (102,288,103 | )
|                                                              |  |                                         |  |             |  |              |  
|Pounds sterling                                               |  | 125,208                                 |  | 125,479     |  | (271         | )
|                                                              |  |                                         |  |             |  |              |  
|Swiss francs                                                  |  |                                         |  | 669         |  | (669         | )
|                                                              |  |                                         |  |             |  |              |  
|Dutch guilders                                                |  | 40                                      |  |             |  | 40           |  
|                                                              |  |                                         |  |             |  |              |  
|Euros                                                         |  | 1,318,788                               |  | 1,369,405   |  | (50,617      | )
|                                                              |  |                                         |  |             |  |              |  
|Net-short position, before foreign-currency hedging (Note 10) |  |                                         |  |             |  |              |  
|                                                              |  |                                         |  |             |  |              |  
|2001:                                                         |  |                                         |  |             |  |              |  
|U.S. dollars                                                  |  | 2,693,204                               |  | 13,967,347  |  | (11,274,143  | )
|                                                              |  |                                         |  |             |  |              |  
|Japanese yen                                                  |  |                                         |  | 71,758,328  |  | (71,758,328  | )
|                                                              |  |                                         |  |             |  |              |  
|Dutch guilders                                                |  | 40                                      |  |             |  | 40           |  
|                                                              |  |                                         |  |             |  |              |  
|Pounds sterling                                               |  |                                         |  | 165,377     |  | (165,377     | )
|                                                              |  |                                         |  |             |  |              |  
|Austrian schillings                                           |  |                                         |  | 212         |  | (212         | )
|                                                              |  |                                         |  |             |  |              |  
|Euros                                                         |  | 467                                     |  | 1,383,966   |  | (1,383,499   | )
|                                                              |  |                                         |  |             |  |              |  
|Other currencies                                              |  | various                                 |  | various     |  | various      |  
|                                                              |  |                                         |  |             |  |              |  
|Net-short position, before foreign-currency hedging (Note 10) |  |                                         |  |             |  |              |  
|                                                              |  |                                         |  |             |  |              |  

F-40

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

15.   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 (Restated amounts
columns), except that the concept of fair value has not been included, 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"                     |  | Ps.                      | 10,222,463 
|Specific oil-field exploration and depletion reserve |  |                          | 9,804,251  
|Revaluation surplus                                  |  |                          | 190,523,462
|Retained earnings (losses):                          |  |                          |            
|Prior years                                          |  |                          | (79,362,514
|Current year                                         |  |                          | (30,492,113
|Restatement of equity                                |  |                          |            
|Deficit from the restatement of equity:              |  |                          |            
|Loss on accumulated monetary position                |  |                          |            
|Equity monetary result                               |  |                          |            
|Accumulated deficit from holding non-monetary assets |  |                          |            
|                                                     |  |                          |            
|                                                     |  | Ps.                      | 100,695,549
|                                                     |  |                          |            

|                                                               |  | Effect on statements of income |           
|-------------------------------------------------------------- |  | ------------------------------ | ----------
|
|Comprehensive cost of financing:                               |  |                                |           
|Interest expense and exchange loss capitalized in fixed assets |  | (Ps.                           | 9,828,586 
|Monetary position gain, net (unaudited)                        |  |                                | 18,634,836
|                                                               |  |                                |           
|                                                               |  | Ps.                            | 8,806,250 
|                                                               |  |                                |           

F-41

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

The above table was prepared using the following procedures and assumptions:

Balance
sheets:



Statements
of operations:



F-42

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

Other:

16.   Commitments and Contingencies



F-43

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)



The
contracts which have been signed to date include:



F-44

---



PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)



F-45

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)



F-46

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)



17.   Marketing of gas

During 2000 and through February 2001, the market-selling price of liquid gas was determined by reference to the average price for the last three months
with a maximum increase of up to 2%. Effective March 2001, by decree of the Economic Committee headed by the Ministry of Economy, the selling price was set at 3.461 pesos per ton for a
four-month period. On July 27, 2001, the Comisión Reguladora de Energía ("CRE") published a release for the selling price of liquid gas in the Official
Daily Gazette, effective August 1, 2001. This price release consists of applying the reference market-selling price of liquid gas, which is based upon the Mount Bellevue price.

F-47

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

18.   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
20,077 million barrels of oil equivalent at December 31, 2002 and 21,893 million barrels of oil equivalent at December 31, 2001. Reserves have been adjusted by revisions,
increases and developments and have been decreased by the production for the year.

19.   Differences between Mexican GAAP and U. S. GAAP

A summary of the significant differences between the accounting principles followed by PEMEX 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 differences involve methods for measuring the amounts shown in the
consolidated financial statements, as well as additional disclosures required by U.S. GAAP.

F-48

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

I.     Differences in measurement methods:

The principal differences between Mexican GAAP and U.S. GAAP are disclosed below. Loss represents pre-tax loss, because PEMEX is not subject to
Mexican income taxes, and is reconciled as follows:

|                                         |                                       | 2002                                                                                             |            | 2001       |            | 2000       |           
|---------------------------------------- | ------------------------------------- | ------------------------------------------------------------------------------------------------ | ---------- | ---------- | ---------- | ---------- | ----------
|Net loss for the year under Mexican GAAP |                                       | (Ps.                                                                                             | 30,492,113 | )          | (Ps.       | 34,090,587 | )         
|                                         |                                       |                                                                                                  |            |            |            |            |           
|U.S. GAAP adjustments:                   |                                       |                                                                                                  |            |            |            |            |           
|                                         | Exploration and drilling costs(a)     |                                                                                                  |            | 926,008    |            |            | 2,034,465 
|                                         | Pensions and seniority premiums(b)    |                                                                                                  |            | (586,224   | )          |            | (263,476  
|                                         | Post-retirement benefits(c)           |                                                                                                  |            | (6,785,498 | )          |            | (6,066,029
|                                         | Accrued vacation(d)                   |                                                                                                  |            | (32,746    | )          |            | (62,405   
|                                         | Fixed asset adjustments:              |                                                                                                  |            |            |            |            |           
|                                         |                                       |     Depreciation expense(f)                                                                     |            |            | 12,321,750 |            |           
|                                         |                                       |     Foreign currency exchange losses and capitalized losses of hedging financial instruments(g) |            |            | (4,841,357 | )          |           
|                                         |                                       |     Capitalization of interest, net(h)                                                          |            |            | 525,597    |            |           
|                                         |                                       |     Fixed asset impairment, net(i)                                                              |            |            | 556,087    |            |           
|                                         |                                       |     Depreciation convention(j)                                                                  |            |            | (502,263   | )          |           
|                                         | Accounting for financial instruments: |                                                                                                  |            |            |            |            |           
|                                         |                                       |     Difference in cumulative effect of adoption of new financial instruments standards(k)       |            |            |            |            |           
|                                         |                                       |     Difference in current period effect(k).                                                     |            |            | (2,925,699 | )          |           
|                                         | Sale of shares of Repsol(l)           |                                                                                                  |            |            |            |            |           
|                                         | Profit in inventory(m)                |                                                                                                  |            | (963,441   | )          |            | (52,120   
|                                         |                                       |                                                                                                  |            |            |            |            |           
|Total U.S. GAAP adjustments, net         |                                       |                                                                                                  | (2,307,786 | )          |            | 8,646,476  |           
|Net loss for the year under U.S. GAAP    |                                       | (Ps.                                                                                             | 32,799,899 | )          | (Ps.       | 25,444,111 | )         
|                                         |                                       |                                                                                                  |            |            |            |            |           
|Components of U.S. GAAP net loss:        |                                       |                                                                                                  |            |            |            |            |           
|                                         |                                       | Loss from continuing operations                                                                  |            | (Ps.       | 32,799,899 | )          | (Ps.      
|                                         |                                       | Cumulative effect of accounting change(k)                                                        |            |            |            |            |           
|                                         |                                       |                                                                                                  |            |            |            |            |           
|                                         |                                       | Net loss for the year                                                                            |            | (Ps.       | 32,799,899 | )          | (Ps.      
|                                         |                                       |                                                                                                  |            |            |            |            |           
|Comprehensive loss under U.S. GAAP:      |                                       |                                                                                                  |            |            |            |            |           
|                                         | Net loss for the year under U.S. GAAP |                                                                                                  | (Ps.       | 32,799,899 | )          | (Ps.       | 25,444,111
|                                         | Other comprehensive loss:             |                                                                                                  |            |            |            |            |           
|                                         |                                       | Additional minimum pension liability(c)                                                          |            |            | (8,179,984 | )          |           
|                                         |                                       | Derivative financial instruments(k)                                                              |            |            | 853,982    |            |           
|                                         |                                       | Unrealized gains (losses) on securities(o)                                                       |            |            | 183,446    |            |           
|                                         |                                       | Other equity movements                                                                           |            |            | 40,627     |            |           
|                                         |                                       |                                                                                                  |            |            |            |            |           
|                                         |                                       |                                                                                                  | (7,101,929 | )          |            | (1,166,943 | )         
|Comprehensive loss                       |                                       | (Ps.                                                                                             | 39,901,828 | )          | (Ps.       | 26,611,054 | )         
|                                         |                                       |                                                                                                  |            |            |            |            |           

F-49

---



PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES        NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED  DECEMBER 31, 2002, 2001 AND 2000    
(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

|                                                                             |                                                     | 2002                                                                                               |                                                                       | 2001        |             
|---------------------------------------------------------------------------- | --------------------------------------------------- | -------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------- | ----------- | ------------
|Components of accumulated other comprehensive (loss) income at December 31,: |                                                     |                                                                                                    |                                                                       |             |             
|                                                                             | Additional minimum pension liability(c)             |                                                                                                    | (Ps.                                                                  | 8,179,984   | )           
|                                                                             | Derivative financial instruments(k)                 |                                                                                                    |                                                                       | 383,329     |             
|                                                                             | Unrealized gains on securities(o)                   |                                                                                                    |                                                                       | 4,029,060   |             
|                                                                             | Other equity movements (translation adjustment)     |                                                                                                    |                                                                       | 584,997     |             
|                                                                             |                                                     |                                                                                                    |                                                                       |             |             
|Accumulated other comprehensive income                                       |                                                     | (Ps.                                                                                               | 3,182,598                                                             | )           | Ps.         
|                                                                             |                                                     |                                                                                                    |                                                                       |             |             
|
|Equity (deficit) is reconciled as follows:                                   |                                                     |                                                                                                    |                                                                       |             |             
|Equity under Mexican GAAP                                                    |                                                     | Ps.                                                                                                | 100,695,549                                                           |             | Ps.         
|U.S. GAAP adjustments:                                                       |                                                     |                                                                                                    |                                                                       |             |             
|                                                                             | Exploration and drilling costs(a)                   |                                                                                                    |                                                                       | 15,059,427  |             
|                                                                             | Pensions and seniority premiums(b)                  |                                                                                                    |                                                                       | (12,274,885 | )           
|                                                                             | Post-retirement benefits(c)                         |                                                                                                    |                                                                       | (32,406,643 | )           
|                                                                             | Accrued vacation(d)                                 |                                                                                                    |                                                                       | (496,502    | )           
|                                                                             | Fixed asset adjustments:                            |                                                                                                    |                                                                       |             |             
|                                                                             |                                                     |   Inflation accountingfixed assets valuation(e)                                                  |                                                                       |             | (121,066,759
|                                                                             |                                                     |   Accumulated depreciation(f)                                                                     |                                                                       |             | 56,667,238  
|                                                                             |                                                     |   Foreign currency exchange losses and capitalized losses of
    hedging financial instruments(g) |                                                                       |             | (69,348,925 
|                                                                             |                                                     |   Capitalization of interest, net(h)                                                              |                                                                       |             | (1,773,015  
|                                                                             |                                                     |   Impairment, net(i)                                                                              |                                                                       |             | (21,518,318 
|                                                                             |                                                     |   Depreciation convention(j)                                                                      |                                                                       |             | (2,966,183  
|                                                                             | Accounting for financial instruments(k)             |                                                                                                    |                                                                       | 5,063,092   |             
|                                                                             | Sale of shares of Repsol(l)                         |                                                                                                    |                                                                       | (361,150    | )           
|                                                                             | Profit in inventory(m)                              |                                                                                                    |                                                                       | (1,534,352  | )           
|                                                                             | Advanced payments on minimum guaranteed dividend(n) |                                                                                                    |                                                                       | (9,712,028  | )           
|                                                                             | Available-for-sale investment securities(o)         |                                                                                                    |                                                                       | 4,029,060   |             
|                                                                             |                                                     |                                                                                                    |                                                                       |             |             
|Total U. S. GAAP adjustments, net                                            |                                                     |                                                                                                    | (192,639,943                                                          | )           |             
|                                                                             |                                                     |                                                                                                    |                                                                       |             |             
|Deficit under U. S. GAAP                                                     |                                                     | (Ps.                                                                                               | 91,944,394                                                            | )           | (Ps.        
|                                                                             |                                                     |                                                                                                    |                                                                       |             |             
|
|Changes in U.S. GAAP equity for the year ended December 31:                  |                                                     |                                                                                                    |                                                                       |             |             
|                                                                             | Deficit at December 31                              |                                                                                                    | (Ps.                                                                  | 42,330,538  | )           
|                                                                             |                                                     | Net loss for the period                                                                            |                                                                       |             | (32,799,899 
|                                                                             |                                                     | Minimum guaranteed dividends                                                                       |                                                                       |             | (9,712,028  
|                                                                             |                                                     | Other comprehensive income:                                                                        |                                                                       |             |             
|                                                                             |                                                     |                                                                                                    | Additional minimum pension liability                                  |             |             
|                                                                             |                                                     |                                                                                                    | Derivative financial instruments                                      |             |             
|                                                                             |                                                     |                                                                                                    | Unrealized gains (losses) on available-for-sale investment securities |             |             
|                                                                             |                                                     |                                                                                                    | Other equity movements (translation adjustments)                      |             |             
|                                                                             |                                                     |                                                                                                    |                                                                       |             |             
|                                                                             | Deficit at December 31                              |                                                                                                    | (Ps.                                                                  | 91,944,394  | )           
|                                                                             |                                                     |                                                                                                    |                                                                       |             |             

F-50

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES        NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED  DECEMBER 31, 2002, 2001 AND 2000    
(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

Explanation of reconciling items:

As
discussed in Notes 2 e) and 2 f) under Mexican GAAP, PEMEX charges exploration and drilling costs 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.

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 discovered. 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 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
determined to be impaired (adjustment (i)). PEMEX has accordingly adjusted the results of 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 the exploration and development phase have been capitalized in accordance with U.S. GAAP. The adjustment
is net of the difference in amortization for capitalized amounts.

Under
Mexican GAAP, PEMEX follows the guidance in Bulletin D-3, which 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 the U.S. GAAP guidance provided in Statement of Financial Accounting Standards ("SFAS") No. 87,
"Employers Accounting for Pensions" ("SFAS No. 87"), 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
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 U.S. GAAP, PEMEX follows the guidelines of SFAS No. 106, "Employers' Accounting for Post-Retirement Benefits
Other Than Pensions," ("SFAS No. 106") in accounting for health service and other supplemental payments provided to retirees. SFAS No.

F-51

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES        NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED  DECEMBER 31, 2002, 2001 AND 2000    
(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

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, vacation expense is recognized when the vacation is utilized by the employee. Under U.S. GAAP, vacation expense is accrued for when earned by the employee.

As
mentioned in Note 2 b), PEMEX's consolidated financial statements recognize the effects of inflation pursuant 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 (in the case of inventories) or in the case of fixed
assets, through
appraisals made by independent appraisers or by using the specific price index, with the difference being recorded as a revaluation surplus in equity.

U.S.
GAAP does not require the recognition of the effects of inflation on the consolidated financial statements. Since NIF-06 BIS "A" Section A is not deemed to be a
comprehensive method of accounting for inflation (as discussed in Note 15), PEMEX has eliminated retroactively to 1992 the effect of revaluation of fixed assets, inventories and costs of sales
from the reconciliation of income 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 income and equity. For U.S. GAAP purposes, the 1992 balances became the historical basis of the fixed assets.

Under
Mexican GAAP, PEMEX depreciates the book value of its fixed assets, which 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 (adjustment (e)) and foreign currency exchange losses (adjustment (g)) which are included in the
Mexican GAAP basis of the fixed assets.

Under
Mexican GAAP, exchange losses arising from debt are capitalized as part of fixed assets any remaining net exchange differences is reflected in the statement of operations as either
a debit to costs and operating expenses or a credit to revenues. Under U.S. GAAP, all exchange

F-52

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES        NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED  DECEMBER 31, 2002, 2001 AND 2000    
(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

gains
or losses have been recognized in results of operations for 2002, 2001 and 2000 in the reconciliation of income 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 b), there were no foreign currency exchange losses capitalized in 2001, primarily as a
result of the appreciation of the peso against the U.S. dollar, and therefore, no adjustment has been recognized in the reconciliation for 2001. For the years ended December 31, 2002 and 2000,
PEMEX capitalized Ps. 4,569,508 and Ps. 139,692 of foreign currency exchange losses.

Under
Mexican GAAP, realized losses arising from hedging instruments designated as cash flow hedges are capitalized as part of capitalized interest (adjustment (h)). Under U.S. GAAP,
realized gains and losses arising from currency swap hedging instruments designated as cash flow hedges cannot be capitalized as part of the qualifying assets, but are recognized into earnings during
the same period in which the forecasted transaction affects earnings. For the year ended December 31, 2002, PEMEX capitalized Ps. 271,849 of losses arising from hedging instruments.

Under
Mexican GAAP, interest is capitalized to property, plant and equipment based upon total interest cost incurred on loans allocated to construction projects, regardless of whether or
not the 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 its results of
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.

Interest
costs for the years ended December 31, 2002, 2001 and 2000, for Mexican GAAP and U.S. GAAP purposes were allocated as follows:

F-53

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES        NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED  DECEMBER 31, 2002, 2001 AND 2000    
(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

|                    |                                                                      | 2002 |     | 2001       |  | 2000
|------------------- | -------------------------------------------------------------------- | ---- | --- | ---------- |  | ----
|Under Mexican GAAP: |                                                                      |      |     |            |  |     
|                    | Interest capitalized in fixed assets                                 |      | Ps. | 5,259,078  |  | Ps. 
|                    | Interest in the specific oil-field exploration and depletion reserve |      |     | 48,131     |  |     
|                    | Interest expense                                                     |      |     | 19,610,440 |  |     
|                    |                                                                      |      |     |            |  |     
|                    | Total interest cost                                                  |      | Ps. | 24,917,649 |  | Ps. 
|                    |                                                                      |      |     |            |  |     
|Under U.S. GAAP:    |                                                                      |      |     |            |  |     
|                    | Interest capitalized in fixed assets                                 |      | Ps. | 5,722,573  |  | Ps. 
|                    | Interest expense                                                     |      |     | 19,195,076 |  |     
|                    |                                                                      |      |     |            |  |     
|                    | Total interest cost                                                  |      | Ps. | 24,917,649 |  | Ps. 
|                    |                                                                      |      |     |            |  |     

For
U.S. GAAP purposes, beginning on January 1, 2002, PEMEX follows SFAS No.144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS
No. 144"). For the years ended December 31, 2000 and 2001, PEMEX followed SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of" ("SFAS No. 121"). SFAS No. 144 and SFAS No. 121 provide 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. 144 and 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 the 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 by 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 No. 144 and SFAS No. 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.

F-54

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

In 2002, PEMEX recorded an impairment charge with a credit to operations of Ps. 556,087, representing the net of the U.S. GAAP impairment charge less the reversal
of Mexican GAAP impairment charge previously recognized under U.S. GAAP. In 2001 and 2000, PEMEX recorded impairment charges which reduced long-term assets with a corresponding charge to
operations of Ps. 5,571,939 and Ps. 3,236,480, respectively. The amounts appearing in the income reconciliation are net of the reversal of the depreciation expense which is being recorded under
Mexican GAAP for the basis difference. In 2002 and 2001, the expense relates primarily to oil and gas producing properties, refining assets and petrochemical plants. In 2000, the expense relates
primarily to refining assets and petrochemical plants. Expected cash flows and fair values were estimated internally using PEMEX methodology and practices for valuing similar properties to be acquired
or sold. The 2002 U.S. GAAP adjustment increases earnings since the reversal of the depreciation expense recorded under Mexican GAAP for assets previously impaired under U.S. GAAP was greater than the
current year impairment charge.

(j) Depreciation convention

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 years ended December 31, 2002, 2001 and 2000, due to significant new PIDIREGAS financed through the Master Trust, an adjustment for
depreciation has been recognized in the U.S. GAAP reconciliation.

(k) Accounting for derivatives

Through
December 31, 2000:

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. 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.

F-55

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PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

Policy:

Effective
January 1, 2001, for U.S. GAAP purposes, PEMEX adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS No. 133"), as
amended by SFAS No. 137 and SFAS No. 138 and as interpreted by the Derivative Implementation Group (DIG). SFAS No. 133 establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging
activities. SFAS No. 133 requires that an entity recognize all derivatives as either assets or liabilities in the consolidated balance sheet and measure those instruments at fair value. SFAS
No. 133 prescribes requirements for designation and documentation of hedging relationships and ongoing assessments of effectiveness in order to qualify for hedge accounting.

Hedge
effectiveness is assessed consistently with the method and risk management strategy documented for each hedging relationship. On at least a quarterly basis, PEMEX assesses the
effectiveness of each hedging relationship retrospectively and prospectively to ensure that hedge accounting was appropriate for the prior period and continues to be appropriate for future periods.
PEMEX considers hedge accounting to be appropriate if the assessment of hedge effectiveness indicates that the change in fair value of the designated hedging instrument is highly effective at
offsetting the change in fair value due to the hedged risk of the hedged item or transaction.

If
a derivative instrument qualifies as a fair value hedge under the applicable guidance and is documented as such, the change in the fair value of the derivative and the change in the
fair value of the hedged item that is due to the hedged risk(s) is recorded in earnings based on the income classification of the item being hedged. These hedges also adjust the book values of the
derivatives and hedged item. If a derivative instrument qualifies as a cash flow hedge under the applicable guidance and is documented as such, the effective portion of the hedging instrument's gain
or loss is reported in stockholders' equity (as a component of accumulated other comprehensive income) and is reclassified into earnings in the period during which the transaction being hedged affects
earnings. Gains or losses reclassified from stockholders' equity to earnings are classified in accordance with earnings treatment of the hedged transaction. The ineffective portion of a hedging
derivative's fair value change, where that derivative is used in a cash flow hedge, is recorded in current earnings. Classification in the statement of operations of the ineffective portion of the
hedging instrument's gain or loss is based on the income statement classification of the transaction being hedged. If a derivative instrument does not qualify as a hedge under the applicable guidance,
the change in the fair value of the derivative is immediately recognized in the statements of operations.

F-56

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

PEMEX has entered into contracts for the purchase and/or sale of oil and gas. While some of these contracts meet the definition of a derivative under SFAS
No. 133, PEMEX has determined that the normal purchase or normal sale exception applies to such contracts. Accordingly, such contracts are not accounted for as derivatives pursuant to SFAS
No. 133.

PEMEX
also evaluates contracts for "embedded" derivatives, and considers whether any embedded derivatives have to be bifurcated, or separated, from the host contracts in accordance with
SFAS No. 133 requirements. Embedded derivatives may have terms that are not clearly and closely related to the terms of the host contract in which they are included. If embedded derivatives
exist and are not clearly and closely related to the host contract, they are accounted for separately from the host contract as derivatives, with changes in their fair value recorded in current
earnings, to the extent that the hybrid instrument is not already accounted at fair value.

When
hedge accounting is discontinued due to PEMEX's determination that the derivative no longer qualifies as an effective fair value hedge, PEMEX will continue to carry the derivative
on the balance sheet at its fair value. The related hedged asset or liability will cease to be adjusted for changes in fair value that are due to the previously hedged risk. When PEMEX discontinues
hedge accounting in a cash flow hedge because it is no longer probable that the forecasted transaction will occur in the originally expected period, the gain or loss on the derivative remains in
accumulated other comprehensive income and is reclassified into earnings when the forecasted transaction affects earnings. However, if it is probable that a forecasted transaction will not occur by
the end of the originally specified time period or within an additional two month period of time thereafter, the gains and losses that were accumulated in other comprehensive income will be recognized
in current earnings. If a derivative instrument ceases to meet the criteria for hedge accounting, any subsequent gains and losses are recognized in current earnings.

An
adjustment of the carrying amount of a hedged asset held for sale would remain part of the carrying amount of that asset until the asset is sold, at which point the entire carrying
amount of the hedged asset would be recognized as the cost of the item sold in determining earnings. An adjustment of the carrying amount of a hedged interest-bearing financial instrument shall be
amortized to earnings; amortization shall begin no later than when the hedged item ceases to be adjusted for changes in its fair value attributable to the risk being hedged. As of December 31,
2002, PEMEX had not discontinued any hedge accounting.

Impact
of adoption:

In
accordance with the transition provisions of SFAS No. 133, PEMEX recorded a cumulative effect adjustment totaling Ps. 3,791,269 (benefit to earnings) as of January 1,
2001. There was no cumulative effect adjustment in other comprehensive income as of this date since PEMEX did not have any cash flow hedges upon adoption.

F-57

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

The principal differences between the cumulative effect adjustment under Mexican GAAP and U.S. GAAP relate to the following:



Other
required disclosures:

The
following table indicates the duration and respective rates for the interest rate swaps at December 31:

2002

2001Weighted average (maturity years)

6.19

2.59Average receive rate

3.67
%
4.04
%Average pay rate

5.12
%
7.33
%


F-58

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

Fair value hedges

For
the years December 31, 2002 and 2001, PEMEX recognized a net (loss) gain of (Ps. 1,188,355) and Ps. 381,465 reported as "interest net" in the consolidated Statements of
Operation, which represented the ineffective portion of all fair-value hedges. All components of each derivative's gain or loss were included in the assessment of hedge effectiveness,
except for the time value of option contracts.

Cash
flow hedges

For
the years December 31, 2002 and 2001, PEMEX recognized a net gain (loss) of Ps. 853,982 and (Ps. 470,653) reported as "derivative financial instruments" in the consolidated
other comprehensive loss statement. All components of each derivative's gain or loss were included in the assessment of hedge effectiveness, except for the time value of option contracts.

For
cash flow hedges, gains and losses on derivative contracts that are reclassified from accumulated other comprehensive income to current-period earnings are included in the line item
in which the hedged item is recorded in the same period the forecasted transaction affects earnings. As of December 31, 2002, a net loss of Ps. 156,074 of the balance related to derivative
instruments accumulated in other comprehensive loss are expected to be reclassified during the next twelve months to the consolidated Statement of Operations.

(l) Sale of shares of Repsol

Under
Mexican GAAP, PEMEX recorded a Ps. 118,742 gain in 2000 and a Ps. 242,408 gain in 1994 on the transfer of its Repsol shares. 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. Therefore, under U.S. GAAP, the Repsol shares
would be evaluated pursuant to SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities ("SFAS
No. 115") (adjustment (o)), and the liability equal to the notional amount resulting from these transactions would also be reflected on the balance sheet.

(m) Profit in inventory

Under
Mexican GAAP, PEMEX values crude oil and derivatives for export at net realizable value with the difference between the net realizable value and cost recorded in earnings. In
contrast, U.S. GAAP requires that inventories be recorded at net realizable cost, but not to exceed cost. For U.S. GAAP purposes, PEMEX has eliminated the effect of recognizing a profit within its
inventory balance.

F-59

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

(n) Advance payments on minimum guaranteed dividend

Under
Mexican GAAP, advance payments on the minimum guaranteed dividend owed to the Mexican Government derived from the capitalization of debt as described in Note 13 are recorded
as an account receivable prior to formalization of the amount by the Board of Directors.

Under
U.S. GAAP, such receivable balances are considered as a reduction in equity. PEMEX has accordingly adjusted equity to reflect the minimum guaranteed dividend payment as a reduction
in equity.

The
effective rate used to calculate the minimum guaranteed dividend is LIBOR plus 0.8125% (which was in a range from 2.6363% to 2.8908% and from 3.4475% to 7.4626% for 2002 and 2001,
respectively).

The
scheduled maturities on the original principal amount of the capitalized debt over the next five years, and thereafter, is as follows:

Year2003

U.S.$
873,8482004


873,8482005


873,8482006


873,848Total

U.S.$
3,495,392


(o) Accounting for investment securities

Pursuant
to SFAS No.115, 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 the statement of operations and reported in other comprehensive income (loss). The fair value of the securities is determined by quoted market prices at
December 31, 2002, 2001 and 2000. The cost and fair value of PEMEX's investments at December 31, 2002, 2001 and 2000 are as follows:

Cost

Fair Value

Unrealized Gain2002

Ps. 3,968,724

Ps. 7,997,784

Ps. 4,029,0602001

Ps. 3,968,724

Ps. 7,814,338

Ps. 3,845,6142000

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.

F-60

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

II. Additional disclosure requirements:

(a) Consolidation of Pemex Finance

As
more fully disclosed in Note 7, PEMEX and certain subsidiaries entered into several agreements with Pemex Finance. Under these contracts, Pemex Finance purchases certain
accounts receivable and rights to future receivables. Pemex Finance obtains resources for such purchases through the placement of debt instruments in the international markets.

In
conjunction with the adoption of SFAS No. 140, "Accounting for the Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" in 2001, PEMEX has evaluated
the Pemex Finance structure in light of the permitted and non-permitted activities as well as the transition provisions of a Qualified Special Purpose Entity ("QSPE") and determined that
Pemex Finance does not qualify as a QSPE under the new standard. Consequently, as of December 31, 2002 and 2001, the U.S. GAAP consolidated total assets would have increased by Ps. 4,200,325
and decreased by Ps. 838,337, respectively and total liabilities would have increased by Ps. 1,203,701 and decreased by Ps. 2,299,674, respectively. Had Pemex Finance been consolidated, there would
not have been any effect on equity or net income.

(b) Special Tax on Production and Services ("IEPS Tax")

Under
Mexican GAAP, the IEPS Tax is reflected as part of "Net domestic sales" when charged to customers and the amounts payable to the Government are 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 from "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. 114,491,456, Ps. 95,198,729 and Ps. 69,556,520, for the years ended
December 31, 2002, 2001 and 2000, respectively. In addition, those amounts would not have been deducted after "Income before hydrocarbon extraction duties, special tax on production and
services and other."

F-61

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

(c)
Cash flow information

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. 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 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:

F-62

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

|                                                                                     |                                                                                                 | 2002                                                       |             | 2001        |            | 2000        |            
|------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------- | ---------------------------------------------------------- | ----------- | ----------- | ---------- | ----------- | -----------
|Cash flows from operating activities:                                                |                                                                                                 |                                                            |             |             |            |             |            
|Net loss for the year plus or less charges or credits not requiring the use of cash: |                                                                                                 |                                                            |             |             |            |             |            
|Following U.S. GAAP presentation                                                     |                                                                                                 | Ps.                                                        | 47,480,502  |             | Ps.        | 37,096,160  |            
|                                                                                     | Differences(1)                                                                                  |                                                            |             | (956,718    | )          |             | (647,298   
|                                                                                     |                                                                                                 |                                                            |             |             |            |             |            
|Under Mexican GAAP                                                                   |                                                                                                 |                                                            | 46,523,784  |             |            | 36,448,862  |            
|                                                                                     |                                                                                                 |                                                            |             |             |            |             |            
|Increase (decrease) in assets and liabilities:                                       |                                                                                                 |                                                            |             |             |            |             |            
|Following U.S. GAAP presentation                                                     |                                                                                                 |                                                            | (15,106,358 | )           |            | (8,023,485  | )          
|                                                                                     | Differences                                                                                     |                                                            |             |             |            |             |            
|                                                                                     |                                                                                                 | Accounts receivable(2)                                     |             |             | 8,038,772  |             |            
|                                                                                     |                                                                                                 | Inventory(1)                                               |             |             | 80,170     |             |            
|                                                                                     |                                                                                                 | Sundry credits reserve(1)                                  |             |             | 151,172    |             |            
|                                                                                     |                                                                                                 |                                                            |             |             |            |             |            
|Under Mexican GAAP                                                                   |                                                                                                 |                                                            | (6,836,244  | )           |            | (10,256,249 | )          
|                                                                                     |                                                                                                 |                                                            |             |             |            |             |            
|Funds from operations:                                                               |                                                                                                 |                                                            |             |             |            |             |            
|Following U.S. GAAP presentation                                                     |                                                                                                 |                                                            | 32,374,144  |             |            | 29,072,674  |            
|                                                                                     | Differences                                                                                     |                                                            |             | 7,313,396   |            |             | (2,880,061 
|                                                                                     |                                                                                                 |                                                            |             |             |            |             |            
|Under Mexican GAAP                                                                   |                                                                                                 | Ps.                                                        | 39,687,540  |             | Ps.        | 26,192,613  |            
|                                                                                     |                                                                                                 |                                                            |             |             |            |             |            
|Cash flows from financing activities:                                                |                                                                                                 |                                                            |             |             |            |             |            
|                                                                                     | New long-term debt financing financing                                                          |                                                            | Ps.         | 106,580,957 |            | Ps.         | 114,440,035
|                                                                                     | Financing payments                                                                              |                                                            |             | (50,002,078 | )          |             | (91,904,916
|                                                                                     | Payment of notes payable to contractors                                                         |                                                            |             | (220,134    | )          |             |            
|                                                                                     | Dividends paid to the Mexican Government                                                        |                                                            |             | (9,712,028  | )          |             | (2,152,788 
|                                                                                     | Advance payment on minimum guaranteed dividends                                                 |                                                            |             |             |            |             |            
|                                                                                     | Sale of future accounts receivable                                                              |                                                            |             | (1,246,717  | )          |             | (7,290,971 
|                                                                                     |                                                                                                 |                                                            |             |             |            |             |            
|                                                                                     |                                                                                                 | Net increase in financing following U.S. GAAP presentation |             |             | 45,400,000 |             |            
|Difference:                                                                          |                                                                                                 |                                                            |             |             |            |             |            
|                                                                                     | Loss (gain) on foreign currency exchange and translation effect of foreign Subsidiary Companies |                                                            |             | 23,790,191  |            |             | (8,400,963 
|                                                                                     | Interest accrued, not paid                                                                      |                                                            |             | 759,706     |            |             | 454,849    
|                                                                                     | Dividends paid to the Mexican Government(3)                                                     |                                                            |             | 7,559,239   |            |             | (3,411,011 
|                                                                                     | Other                                                                                           |                                                            |             | 40,627      |            |             | 544,370    
|                                                                                     | Notes payable to contractors                                                                    |                                                            |             | 14,316,317  |            |             | (2,497,711 
|                                                                                     |                                                                                                 |                                                            |             |             |            |             |            
|                                                                                     |                                                                                                 | Net increase (decrease) in financing under Mexican GAAP    |             | Ps.         | 91,866,080 |             | (Ps.       
|                                                                                     |                                                                                                 |                                                            |             |             |            |             |            

F-63

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

|                                                                                                                                                     |                                                       | 2002 |             | 2001        |      | 2000        |            
|---------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------- | ---- | ----------- | ----------- | ---- | ----------- | -----------
|Cash flows from investing activities:                                                                                                                |                                                       |      |             |             |      |             |            
|                                                                                                                                                     | Acquisition of fixed assets                           |      | (Ps.        | 77,021,357  | )    | (Ps.        | 52,167,537 
|                                                                                                                                                     |                                                       |      |             |             |      |             |            
|Net investment at cost in property, wells, plants and transportation equipment under U.S. GAAP                                                       |                                                       |      | (77,021,357 | )           |      | (52,167,537 | )          
|Capitalized exchange loss                                                                                                                            |                                                       |      | (4,569,508  | )           |      |             |            
|Translation effect of foreign Subsidiary Companies                                                                                                   |                                                       |      | (18,545,379 | )           |      |             |            
|Disposal of fixed assets(4)                                                                                                                          |                                                       |      | 12,333,523  |             |      | 12,809,048  |            
|Acquisitions not requiring cash                                                                                                                      |                                                       |      | (14,316,317 | )           |      |             |            
|                                                                                                                                                     |                                                       |      |             |             |      |             |            
|Net investment at cost in property, wells, plants and transportation equipment under Mexican GAAP (including capitalized exchange loss and interest) |                                                       | (Ps. | 102,119,038 | )           | (Ps. | 39,358,489  | )          
|                                                                                                                                                     |                                                       |      |             |             |      |             |            
|                                                                                                                                                     | Supplemental cash flow information:                   |      |             |             |      |             |            
|                                                                                                                                                     | Cash payments for taxes                               |      | Ps.         | 268,255,231 |      | Ps.         | 288,676,019
|                                                                                                                                                     | Cash payments for interest, net of amount capitalized |      |             | 22,233,264  |      |             | 18,687,520 

---

Cash and cash equivalents include all cash balances and highly liquid instruments purchased with an original maturity of three months or less.

(d)
Environmental, dismantlement and abandonment

Environmental:

PEMEX
estimates its environmental liabilities on a site-by-site basis based on the best available information. After an affected area is identified, PEMEX
establishes accruals for its environmental liabilities using costs of prior or current remediation works with similar characteristics. PEMEX establishes accruals using estimates based on costs of
similar remediation works most recently contracted and in progress at that time.

In
1999, PEMEX implemented new internal guidelines for estimating and recording environmental liabilities. The guidelines,Pasivos Ambientales:
Definición y Lineamientos para

F-64

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

su Cuantificación y Registro Contable(Environmental Liabilities: Definition and Guidelines for their Quantification and Accounting
Treatment), sought to standardize and improve upon PEMEX's internal procedures for identifying necessary remediation works and estimating and monitoring environmental liabilities. These guidelines
codified existing policy with respect to estimating environmental liabilities, and establish that an environmental liability exists when:



As
stated above, in accordance with past and present internal guidelines, PEMEX conducts site-by-site studies to identify environmental liabilities and develop a
reasonable estimate of such liabilities. These guidelines consider many factors but are tailored to specific Mexican requirements. Each contaminated site must be characterized, quantified and assessed
through a specific study. The contamination of the affected sites may extend to the soil, subsoil and bodies of water, including water deposits, lagoons, swamps and others. These sites may be located
inside PEMEX's facilities, in surrounding areas, in abandoned areas where PEMEX had activity in the past or along the pipelines.

Once
the corresponding contaminated site has been identified and evaluated, expenses for the cleanup of (i) hydrocarbon seepage and other spills that may cause pollution and that
cannot be corrected in a short timeframe, (ii) water deposits and (iii) the concentration of hazardous residuals, will be included in
the remediation or restoration of affected areas. Estimates are kept current based on best available information.

Based
on reports from field managers and other available information, management prepares reports for identified affected areas on a periodic basis. When the contamination relates to a
new incident, PEMEX informs PROFEPA and responds immediately to eliminate the cause of the incident or to minimize its effects. Subsequently, PEMEX and PROFEPA jointly determine whether the
contamination has been eliminated or if additional actions are necessary for the remediation of the site.

PEMEX
believes its environmental liabilities are probable when its initial studies reveal the existence of contamination in the inspected areas at levels above those permitted by Mexican
law, indicating that PEMEX will have to perform remediation works necessary to bring the site into compliance. PEMEX believes the liability is reasonably estimable when (i) an assessment of the
size of the affected area has been made, (ii) it has compared the affected area to other affected areas identified and addressed in the past, and (iii) based on PEMEX's experience with
current or recent works on similar sites, PEMEX can assess the estimated remediation costs in

F-65

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

order
to be able to calculate the corresponding environmental liability. Thus, PEMEX accrues for these environmental liabilities when it identifies affected areas with contamination levels above those
permitted by Mexican law and PEMEX is able to make a reasonable estimate of the size of the affected area and the remediation cost. In addition, PEMEX periodically revises its estimates of
environmental liabilities as it obtains new information during the course of the remediation works in order to ensure its estimates are based on the most accurate and updated information.

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

During
2002 and 2001, PEMEX invested Ps. 3,057,000 and Ps. 2,787,000, respectively, in various environmental projects. 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 conducting 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 a procedure (Procedimiento para la Determinación de Gastos Asociados a las Actividades de Seguridad
Industrial y Protección Ambiental) 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 the Environmental Law as such law has been historically interpreted and enforced.

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.

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.

F-66

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

PEMEX has contracted insurance policies to cover the cost of certain environmental contingencies. The liability accruals are not reflected net of any amounts
forthcoming under such policies.

Environmental
liabilities accrued in the consolidated financial statements, for both Mexican GAAP and U.S. GAAP purposes, as of December 31, 2002 and 2001 are divided among the
operating units as follows:

2002

2001Pemex-Exploration and Production

Ps.
1,263,335

Ps.
1,315,608Pemex-Refining


773,936


846,638Pemex-Gas and Basic Petrochemicals


139,938


131,383Pemex-Petrochemicals


22,546


22,546Total Environmental Liability Accrual

Ps.
2,199,755

Ps.
2,316,175


Dismantlement
and abandonment costs:

Under
current Mexican law, PEMEX's legal obligation related to dismantlement and abandonment activities is governed by the following two federal laws: the Petroleum Works Law and the
Environmental Law described above. Although PEMEX is subject to other laws and regulations established at a local level in areas where PEMEX undertakes petroleum extractive activities, these local
laws and regulations do not contain any specific guidance on abandonment, restoration and removal of oil and gas facilities or otherwise impose a higher standard on PEMEX in this regard. The United
Mexican States is not a party to any international treaty or convention that would affect PEMEX's understanding of its obligation with regard to dismantlement and abandonment activities. Thus, the
only relevant law for PEMEX as to abandonment, and removal of facilities related to oil- and gas-producing activities is Mexican federal law.

The
Petroleum Works Law provides that wells must be plugged, or in certain special cases capped, to ensure the maintenance of sanitary and safe conditions and to prevent the seepage of
hydrocarbons to the surface. The Petroleum Works Law requires that PEMEX plug a well when

F-67

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

it
turns out to be dry, invaded with salt water or abandoned due to a mechanical accident, or once a well's production has been depleted such that abandonment is necessary due to economic
unfeasibility of production. 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.

PEMEX
must obtain authorization from the Ministry of Energy before performing any plugging activities. The Petroleum Works Law also states that the Ministry of Energy may also authorize
temporary plugging of exploratory wells where production of hydrocarbons is commercially feasible but for which there are no adequate means for its exploitation.

PEMEX
monitors and reviews its own internal estimates of costs to undertake dismantlement and abandonment at levels consistent with Mexican legal requirements and guidelines for oil and
gas industry extractive activities. Estimates as to aggregate costs consider PEMEX's operational specifics such as its number of onshore and offshore wells, depth of wells, varying nature of offshore
platforms, expected production lives, current expectations as to when the costs will be incurred based on present production rates and other operational specifics. The actual costs incurred in the
dismantlement and retirement of wells are considered where practicable, as described above. The average cost for plugging and dismantlement varies from producing region to producing region and from
platform to platform. For the offshore regions, to the extent that actual costs are not available due to limited plugging and dismantlement activity historically, PEMEX uses estimates based on
services costs. The estimated costs are both peso- and U.S. dollar-denominated.

(e)
Pensions and seniority premiums

PEMEX
follows SFAS No. 87 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.

F-68

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

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 5.3%, the accumulated benefit obligation calculated under SFAS No. 87 would be Ps. 194,311,592.

The
components of net seniority premium and pension plan cost, calculated in accordance with SFAS No. 87, consist of the following:

|                                                            |  | 2002 |             | 2001 |     | 2000        |  
|----------------------------------------------------------- |  | ---- | ----------- | ---- | --- | ----------- | -
|Service cost: benefits earned during the year               |  | Ps.  | 5,137,455   |      | Ps. | 4,311,446   |  
|Interest cost on projected benefit obligation               |  |      | 18,142,619  |      |     | 16,490,339  |  
|Expected return on plan assets                              |  |      | (434,843    | )    |     | (996,151    | )
|Net amortization and deferral                               |  |      | 4,516,601   |      |     | 3,840,020   |  
|Amortization of net transition obligation                   |  |      | 1,122,160   |      |     | 1,122,160   |  
|                                                            |  |      |             |      |     |             |  
|Net cost under U.S. GAAP                                    |  |      | 28,483,992  |      |     | 24,767,814  |  
|Net cost under Mexican GAAP                                 |  |      | (27,897,768 | )    |     | (24,504,338 | )
|                                                            |  |      |             |      |     |             |  
|Additional expense that would be recognized under U.S. GAAP |  | Ps.  | 586,224     |      | Ps. | 263,476     |  
|                                                            |  |      |             |      |     |             |  

Actuarial
assumptions used in the calculation of net seniority premium and pension plan cost under U.S. GAAP as of December 31 are:

F-69

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

|                                            |  | 2002  |   | 2001  |   | 2000  |  
|------------------------------------------- |  | ----- | - | ----- | - | ----- | -
|Discount rate                               |  | 11.00 | % | 11.00 | % | 12.00 | %
|Rates of increase in compensation levels    |  | 7.00  | % | 7.00  | % | 8.00  | %
|Expected long-term rate of return on assets |  | 12.00 | % | 12.00 | % | 13.00 | %

The
combined seniority premium and pension plan liability as of December 31, under SFAS No. 87 is as follows:

|                                                                              |  | 2002 |              | 2001 |    
|----------------------------------------------------------------------------- |  | ---- | ------------ | ---- | ---
|Accumulated benefit obligation                                                |  | Ps.  | 164,157,974  |      | Ps.
|                                                                              |  |      |              |      |    
|Projected benefit obligation                                                  |  | Ps.  | 201,335,525  |      | Ps.
|Plan assets at fair value                                                     |  |      | (6,603,230   | )    |    
|                                                                              |  |      |              |      |    
|Projected benefit obligation in excess of plan assets                         |  |      | 194,732,295  |      |    
|Unrecognized net loss                                                         |  |      | (45,357,535  | )    |    
|Unrecognized transition obligation                                            |  |      | (2,244,331   | )    |    
|Prior service cost                                                            |  |      | (36,046,113  | )    |    
|                                                                              |  |      |              |      |    
|Accrued liability under U.S. GAAP                                             |  |      | 111,084,316  |      |    
|Accrued costs recognized in the consolidated balance sheet under Mexican GAAP |  |      | (106,989,413 | )    |    
|                                                                              |  |      |              |      |    
|Net U.S. GAAP adjustment to seniority premium and pension plan liability      |  | Ps.  | 4,094,903    |      | Ps.
|                                                                              |  |      |              |      |    
|Additional minimum liability                                                  |  | Ps.  | 46,470,428   |      | Ps.
|                                                                              |  |      |              |      |    

The
plan's assets consist primarily of cash, investments and an interest in a real estate joint venture.

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 provided that the
asset recognized does not exceed the
sum of the unrecognized prior service cost and the unrecognized transition obligation for the year. If the additional minimum liability exceeds the sum of the

F-70

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

unrecognized
prior service cost and the unrecognized transition obligation for the year, the excess is reported as other comprehensive income. As of December 31, 2002, PEMEX recognized an
intangible asset of Ps. 38,290,444 and other comprehensive income of Ps. 8,179,984 in relation to the additional minimum pension liability.

(f)
Post retirement benefits

PEMEX
has implemented SFAS No. 106 effective January 1, 1995, using the transitional recognition method.

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.

F-71

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

The components of other post-retirement benefits expense consist of the following for the years ended December 31, 2002, 2001 and 2000:

|                                                       |  | 2002 |            | 2001 |     | 2000       |  
|------------------------------------------------------ |  | ---- | ---------- | ---- | --- | ---------- | -
|
|Service cost                                           |  | Ps.  | 1,465,975  |      | Ps. | 1,254,643  |  
|Interest cost                                          |  |      | 5,977,181  |      |     | 6,003,097  |  
|Amortization of actuarial (gains) and losses           |  |      | (710,195   | )    |     | 1,028,553  |  
|Amortization of prior service cost and plan amendments |  |      | 2,218,873  |      |     | 151,319    |  
|Amortization of transition obligation                  |  |      | 418,020    |      |     | 518,346    |  
|                                                       |  |      |            |      |     |            |  
|Net expense under U.S. GAAP                            |  |      | 9,369,854  |      |     | 8,955,958  |  
|Expense under Mexican
GAAP                             |  |      | (9,237,055 | )    |     | (2,303,259 | )
|                                                       |  |      |            |      |     |            |  
|Additional expense under U.S. GAAP                     |  | Ps.  | 132,799    |      | Ps. | 6,652,699  |  
|                                                       |  |      |            |      |     |            |  

F-72

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

Actuarial assumptions used in the calculation of other post-retirement benefits under U.S. GAAP as of December 31 were:

2002

2001

2000Discount rate

11.00
%
11.00
%
12.00
%Health care cost trend rate

5.90
%
7.00
%
8.00
%


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. 1,234,987 (Ps. 1,397,913 for 2001 and Ps. 1,292,063 for 2000) and increase
the accumulated post-retirement benefit obligation by Ps. 6,408,972 (Ps. 9,479,221 for 2001 and Ps. 8,249,215 for 2000). The effect of a 1% decrease in the health care cost trend rate is
to decrease net expense for post-retirement benefits by Ps. 832,127 (Ps. 1,220,234 for 2001 and Ps. 1,072,910 for 2000) and decrease the accumulated post-retirement benefit
obligation by Ps. 5,372,008 (Ps. 8,565,254 for 2001 and Ps. 6,983,839 for 2000).

F-73

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

The other post-retirement benefit liability as of December 31, 2002 and 2001 is as follows:

|                                                         |                                    | 2002  |             | 2001       |           
|-------------------------------------------------------- | ---------------------------------- | ----- | ----------- | ---------- | ----------
|
|Accumulated unfunded post retirement benefit obligation: |                                    |       |             |            |           
|                                                         | Retirees                           |       | Ps.         | 35,458,671 |           
|                                                         | Fully eligible active participants |       |             | 4,138,169  |           
|                                                         | Other active plan participants     |       |             | 27,733,192 |           
|                                                         |                                    |       |             |            |           
|                                                         |                                    | Total |             |            | 67,330,032
|Unrecognized actuarial losses (gains)                    |                                    |       | 4,907,794   |            |           
|Prior service cost and plan amendments                   |                                    |       | (34,621,358 | )          |           
|Unamortized transition obligation                        |                                    |       | (4,088,547  | )          |           
|                                                         |                                    |       |             |            |           
|Net post-retirement benefit liability: U.S. GAAP         |                                    |       | 33,527,921  |            |           
|Mexican GAAP                                             |                                    |       | (33,638,354 | )          |           
|                                                         |                                    |       |             |            |           
|Net U.S. GAAP adjustment                                 |                                    | (Ps.  | 110,433     | )          | Ps.       
|                                                         |                                    |       |             |            |           

F-74

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

Pursuant to the requirements of SFAS No. 132, 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.                                     | 168,703,289 |                       | Ps. | 140,678,169     |  
|Service cost                                   |  |                                         | 5,137,455   |                       |     | 4,311,446       |  
|Interest cost                                  |  |                                         | 18,142,619  |                       |     | 16,490,339      |  
|Amendments                                     |  |                                         | 2,090,724   |                       |     | 8,784,055       |  
|Actuarial (gains)/losses                       |  |                                         | 15,261,252  |                       |     | 4,847,291       |  
|Benefits paid                                  |  |                                         | (7,999,814  | )                     |     | (6,408,011      | )
|                                               |  |                                         |             |                       |     |                 |  
|Benefits obligation at end of year             |  | Ps.                                     | 201,335,525 |                       | Ps. | 168,703,289     |  
|                                               |  |                                         |             |                       |     |                 |  
|Change in plan assets                          |  |                                         |             |                       |     |                 |  
|Fair value of plan assets at beginning of year |  | Ps.                                     | 5,803,396   |                       | Ps. | 9,330,702       |  
|Actual return on plan assets                   |  |                                         | 824,630     |                       |     | 985,362         |  
|Company contributions                          |  |                                         | 7,793,643   |                       |     | 1,763,403       |  
|Benefits paid                                  |  |                                         | (7,818,439  | )                     |     | (6,276,071      | )
|                                               |  |                                         |             |                       |     |                 |  
|Fair value of plan assets at end of year       |  | Ps.                                     | 6,603,230   |                       | Ps. | 5,803,396       |  
|                                               |  |                                         |             |                       |     |                 |  

F-75

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

During
2002, 2001 and 2000, PEMEX's rent expense under operating leases amounted to Ps. 1,444, Ps. 13,289 and Ps. 49,379, respectively. As of December 31, 2002, the Company did
not have any outstanding operating lease arrangements.

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, 2002:

Capital
Leases(1)2003

Ps.
613,5302004


855,0032005


714,3872006


583,1282007


674,8062008 and thereafter


1,447,626Ps.
4,888,480


---

Assets acquired under capital leases, together with their related depreciation, are included in "Properties, 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.



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

F-76

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PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

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:



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. All information presented herein is on a Mexican GAAP basis.

F-77

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PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

|                               |              | Exploration
and
Production |             | Refining    |  | Gas and Basic
Petrochemicals |             | Petrochemicals |            | Subsidiary
Companies |  | Intersegment
Eliminations |            | Total |            
|------------------------------ | ------------ | -------------------------- | ----------- | ----------- |  | ---------------------------- | ----------- | -------------- | ---------- | -------------------- |  | ------------------------- | ---------- | ----- | -----------
|Year ended December 31, 2002:  |              |                            |             |             |  |                              |             |                |            |                      |  |                           |            |       |            
|Sales:                         |              |                            |             |             |  |                              |             |                |            |                      |  |                           |            |       |            
|                               | Trade        |                            | Ps.         | 128,762,652 |  | Ps.                          | 256,272,795 |                | Ps.        | 62,435,825           |  | Ps.                       | 8,187,177  |       | Ps.        
|                               | Intersegment |                            |             | 152,906,222 |  |                              | 7,890,562   |                |            | 20,726,782           |  |                           | 2,993,281  |       |            
|                               |              |                            |             |             |  |                              |             |                |            |                      |  |                           |            |       |            
|Total net sales                |              |                            | 281,668,874 |             |  | 264,163,357                  |             |                | 83,162,607 |                      |  | 11,180,458                |            |       | 222,977,373
|Interest income                |              |                            | 2,069,628   |             |  | 36,794                       |             |                | 1,178,796  |                      |  | 133,080                   |            |       | 8,792,957  
|Interest expense               |              |                            | 9,773,557   |             |  | 5,359,570                    |             |                | 1,064,647  |                      |  | 1,172,950                 |            |       | 18,864,645 
|Net income (loss) for the year |              |                            | 15,366,504  |             |  | (35,321,036                  | )           |                | 2,455,182  |                      |  | (12,109,851               | )          |       | (784,346   
|Depreciation and amortization  |              |                            | 20,100,774  |             |  | 6,394,350                    |             |                | 3,229,272  |                      |  | 1,152,947                 |            |       | 742,716    
|Acquisition of fixed assets(1) |              |                            | 6,968,098   |             |  | 22,675,378                   |             |                | 1,448,980  |                      |  | 1,847,199                 |            |       | 58,398,019 
|Total assets                   |              |                            | 400,591,904 |             |  | 186,383,808                  |             |                | 61,770,975 |                      |  | 24,860,024                |            |       | 583,002,850
|Year ended December 31, 2001:  |              |                            |             |             |  |                              |             |                |            |                      |  |                           |            |       |            
|Sales:                         |              |                            |             |             |  |                              |             |                |            |                      |  |                           |            |       |            
|                               | Trade        |                            | Ps.         | 111,166,914 |  | Ps.                          | 239,230,195 |                | Ps.        | 65,282,808           |  | Ps.                       | 9,013,903  |       | Ps.        
|                               | Intersegment |                            |             | 153,838,141 |  |                              | 8,788,293   |                |            | 27,516,653           |  |                           | 2,794,650  |       |            
|                               |              |                            |             |             |  |                              |             |                |            |                      |  |                           |            |       |            
|Total net sales                |              |                            | 265,005,055 |             |  | 248,018,488                  |             |                | 92,799,461 |                      |  | 11,808,553                |            |       | 200,505,882
|Interest income                |              |                            | 3,779,410   |             |  | 196,043                      |             |                | 364,343    |                      |  | 126,053                   |            |       | 8,139,494  
|Interest expense               |              |                            | 7,854,598   |             |  | 7,098,405                    |             |                | 817,696    |                      |  | 1,094,847                 |            |       | 14,925,202 
|Net income (loss) for the year |              |                            | 8,785,168   |             |  | (29,601,028                  | )           |                | 626,726    |                      |  | (10,198,863               | )          |       | (1,569,220 
|Depreciation and Amortization  |              |                            | 17,070,157  |             |  | 6,688,398                    |             |                | 3,041,165  |                      |  | 861,701                   |            |       | 791,946    
|Acquisition of fixed assets(2) |              |                            | 39,716,330  |             |  | 6,996,977                    |             |                | 2,253,130  |                      |  | 1,131,194                 |            |       | 1,574,369  
|Total assets                   |              |                            | 330,326,527 |             |  | 159,168,158                  |             |                | 50,579,783 |                      |  | 24,910,332                |            |       | 404,144,993
|Year ended December 31, 2000:  |              |                            |             |             |  |                              |             |                |            |                      |  |                           |            |       |            
|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 income                |              |                            | 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 
|Net income (loss) for the year |              |                            | 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                |            |       | 381,915,179

---

F-78

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)



The
majority of PEMEX's operations are in Mexico. The following shows PEMEX's domestic and export sales for the years ended December 31:

2002

2001

2000Domestic sales

Ps.
314,270,644

Ps.
303,853,144

Ps.
292,880,287Export sales:United States


137,722,740


123,624,322


137,065,181Canada, Central and South America


10,758,768


1,161,540


19,573,224Europe


14,878,947


13,895,101


15,591,932Far East


3,806,018


2,796,055


3,156,971Total export sales


167,166,473


141,477,018


175,387,308Total sales

Ps.
481,437,117

Ps.
445,330,162

Ps.
468,267,595


PEMEX
does not have significant long-lived assets outside of Mexico.

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, 2002:                                       |                                                      |                                |     |                                         |  |            |         |                         
|Reserves deducted in the balance sheet from the assets to which they apply: |                                                      |                                |     |                                         |  |            |         |                         
|                                                                            | Allowance for uncollectible trade accounts           |                                | Ps. | 1,258,295                               |  | Ps.        | 834,406 |                         
|                                                                            | Allowance for slow-moving inventory and obsolescence |                                | Ps. | 1,982,572                               |  | Ps.        | 504,693 |                         
|For the year ended December 31, 2001:                                       |                                                      |                                |     |                                         |  |            |         |                         
|Reserves deducted in the balance sheet from the assets to which they apply: |                                                      |                                |     |                                         |  |            |         |                         
|                                                                            | Allowance for uncollectible trade accounts           |                                | Ps. | 1,214,596                               |  | Ps.        | 147,847 |                         
|                                                                            | Allowance for slow-moving inventory and obsolescence |                                | Ps. | 2,261,065                               |  | Ps.        | 195,616 |                         
|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 |                         

F-79

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

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.

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 as well as general economic factors such as
inflation.

As
discussed previously, PEMEX accrues an environmental liability when a reasonable estimate of the costs for remediation or clean-up of the identified affected area has been
made. In 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 assessments, which may give rise to an environmental liability, and therefore, no amounts related to such items have been reflected in the
environmental accrual.

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.

F-80

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

Labor

PEMEX employees belonging to the Petroleum Workers' Union of the Mexican Republic represent approximately 79.2% 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 35% of PEMEX's sales revenues net of IEPS Tax 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.

Direct
internal and external costs related to the development of internal use software are deferred and included in other assets. Capitalized software costs, net of amortization, as of
December 31, 2002 and 2001 amounted to Ps. 219,983 and Ps. 706,665, respectively. Amortization expense for the years ended December 31, 2002, 2001 and 2000 amounted to Ps. 662,383, Ps.
201,150 and Ps. 167,128, respectively.

In
June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 143, "Accounting for Asset Retirement Obligations". SFAS No. 143 requires the
recognition of a liability for the legal obligations associated with the retirement of a tangible long-lived asset that results from the acquisition, construction and/or normal operation
of the asset. The liability is recognized at fair value in the period in which it is incurred if a reasonable estimate of fair value can be made. A corresponding asset retirement cost is added to the
carrying value of the long-lived asset and is depreciated to expense using a systematic and rational method over its useful life. SFAS No. 143 is effective for fiscal years
beginning after June 15, 2002. Upon initial

F-81

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

adoption,
a liability is recognized for existing asset retirement obligations and the associated asset retirement cost is capitalized as an increase to the carrying value of the asset. The recognized
liability and asset are adjusted for cumulative accretion and accumulated depreciation, respectively, from the time period when the asset retirement obligation would have originally been recognized
had this statement been in effect to the date of initial adoption. The cumulative effect of initial adoption of
SFAS No. 143 is recorded as a change in accounting principle. Management is currently evaluating the impact the adoption of SFAS No. 143 will have on the consolidated financial
statements.

In
April 2002, the FASB issued SFAS No. 145, "Rescission of SFAS Nos. 4, 44, and 64, Amendment of SFAS No. 13, and Technical Corrections as of April 2002".
SFAS No. 145 rescinds SFAS No. 4, "Reporting Gains and Losses from Extinguishment of Debt," SFAS No. 44, "Accounting for Intangible Assets of Motor Carriers," and SFAS
No. 64, "Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements". As a result, gains and losses from extinguishment of debt will no longer be classified as extraordinary
items unless they meet the criteria of unusual or infrequent as described in APB Opinion No. 30, "Reporting the Results of Operations -Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions". In addition, SFAS No. 145 amends SFAS No. 13, "Accounting for Leases," to eliminate an
inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to
sale-leaseback transactions. SFAS No. 145 also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their
applicability under changed conditions. SFAS No. 145 is effective for fiscal years beginning after May 15, 2002. Management is currently evaluating the impact the adoption of SFAS
No. 145 will have on the consolidated financial statements.

In
June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities". The issuance of SFAS No. 146 nullifies the former
guidance provided by the Emerging Issues Task Force ("EITF") Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring" ("EITF 94-3"). SFAS No. 146 requires the recognition of a liability for costs associated with exit or disposal activity when
the liability is incurred, rather then on the date commitment to an exit or disposal plan. SFAS No. 146 is effective for liabilities, related to exit or disposal activities, which are incurred
after December 31, 2002, while earlier application is encouraged. Management is currently evaluating the impact the adoption of SFAS No. 146 will have on the consolidated financial
statements.

F-82

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." SFAS No. 149
amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and
for hedging activities under SFAS No. 133. SFAS No. 149 is effective prospectively for contracts entered into or modified after June 30, 2003 and prospectively for hedging
relationships designated after June 30, 2003. Management is currently evaluating the impact the adoption of SFAS No. 149 will have on the consolidated financial statements.

In
November 2002, the FASB issued Interpretation No. 45 ("FIN 45"), "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others (an interpretation of FASB Statements No. 5, 57, and 107 and rescission of Interpretation No. 34)." FIN 45 clarifies the requirements of SFAS No. 5,
"Accounting for Contingencies", relating to a guarantor's accounting for, and disclosure of, the issuance of certain types of guarantees. FIN 45 requires that upon issuance of a guarantee, the
guarantor must recognize a liability for the fair value of the obligation it assumes under that guarantee. FIN 45's provisions for initial recognition and measurement should be applied on a
prospective basis to guarantees issued or modified after December 31, 2002, irrespective of the guarantor's fiscal year-end. The guarantor's previous accounting for guarantees that
were issued before the date of FIN 45's initial application may not be revised or restated to reflect the effect of the recognition and measurement provisions of the Interpretation. The disclosure
requirements are effective for financial statements of both interim and annual periods that end after December 15, 2002. Management is currently evaluating the impact the adoption of FIN 45
will have on the consolidated financial statements.

In
January 2003, the FASB issued Interpretation No. 46 ("FIN 46"), "Consolidation of Variable Interest Entities, an interpretation of ARB 51." The primary objectives of FIN
46 are to provide guidance on the identification of entities for which control is achieved through means other than through voting rights ("variable interest entities" or "VIEs") and how to determine
when and which business enterprise should consolidate the VIE (the "primary beneficiary"). This new model for consolidation applies to an entity which either (1) the equity investors (if any)
do not have a controlling financial
interest or (2) the equity investment at risk is insufficient to finance that entity's activities without receiving additional subordinated financial support from other parties. In addition,
FIN 46 requires that both the primary beneficiary and all other enterprises with a significant variable interest in a VIE make additional disclosures. FIN 46 applies immediately to variable interest
entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains an interest after that date. It applies in the first fiscal year or interim period
beginning after June 15, 2003, to variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. FIN 46 applies to public
enterprises as of the beginning of the applicable interim or annual period, and it applies to

F-83

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

nonpublic
enterprises as of the end of the applicable annual period. Management is currently evaluating the impact that the adoption of FIN 46 will have on the consolidated financial statements.

20.   Subsidiary guarantor information

The following consolidating information presents condensed balance sheets at December 31, 2002 and 2001 and condensed statements of operations and changes
in financial position for the years ended December 31, 2002, 2001 and 2000 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 15 to the consolidated financial statements), with one exception: for the purposes of the
presentation of the subsidiary guarantor information, the Subsidiary Entities and Subsidiary Companies have been accounted for as investments under the equity method by Petróleos
Mexicanos. Earnings of subsidiaries are therefore reflected in Petróleos Mexicanos' investment account and earnings. The principal elimination entries eliminate Petróleos
Mexicanos' investment in subsidiaries and intercompany balances and transactions. 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 and the Subsidiary Companies
collectively comprise the non-guarantor subsidiaries ("Non-Guarantor Subsidiaries"). Petróleos Mexicanos and the Master 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 are established in Note 19. The U.S. GAAP adjustment related to exploration and drilling costs is
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, pensions and seniority premiums, post-retirement benefits, profit in inventory, 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,
Pemex-Exploration and Production, Pemex-Petrochemicals, Pemex-Gas and Basic

F-84

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(Amounts expressed in thousands of pesos and thousands of U.S. dollars)

Petrochemicals,
Pemex-Refining and the Master Trust. The U.S. GAAP adjustments related to depreciation and capitalization of interest relate to Petróleos Mexicanos, Pemex-Exploration
and Production, Pemex-Petrochemicals, Pemex-Gas and Basic Petrochemicals and Pemex-Refining. The U.S. GAAP adjustment related to depreciation convention relates to Petróleos
Mexicanos,
Pemex-Exploration and Production, Pemex-Petrochemicals, Pemex-Gas and Basic Petrochemicals, Pemex-Refining and the Master Trust, as well as another subsidiary. All other U.S. GAAP
adjustments relate collectively to Petróleos Mexicanos, Pemex-Refining, Pemex-Exploration and Production and Pemex-Gas and Basic Petrochemicals.

F-85

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For The Years Ended December 31, 2002, 2001 and 2000

(In thousands of pesos and thousands of U.S. dollars)

SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
BALANCE SHEET
As of December 31, 2002

|                                                                                               |                                           | Corporate                    |             | Subsidiary
Guarantors |             | Non-Guarantor
Subsidiaries |             | Eliminations |             | PEMEX
Consolidated |            
|---------------------------------------------------------------------------------------------- | ----------------------------------------- | ---------------------------- | ----------- | --------------------- | ----------- | -------------------------- | ----------- | ------------ | ----------- | ------------------ | -----------
|ASSETS                                                                                         |                                           |                              |             |                       |             |                            |             |              |             |                    |            
|Current assets:                                                                                |                                           |                              |             |                       |             |                            |             |              |             |                    |            
|                                                                                               | Cash and cash equivalents                 |                              | Ps.         | 22,285,751            |             | Ps.                        | 845,756     |              | Ps.         | 20,744,939         |            
|                                                                                               | Accounts, notes receivable and other, net |                              |             | 39,163,582            |             |                            | 170,962,340 |              |             | 46,321,262         |            
|                                                                                               | Inventories, net                          |                              |             | 390,612               |             |                            | 20,813,572  |              |             | 3,378,862          |            
|                                                                                               |                                           |                              |             |                       |             |                            |             |              |             |                    |            
|                                                                                               |                                           | Total current assets         |             |                       | 61,839,945  |                            |             | 192,621,668  |             |                    | 70,445,063 
|Long term debt receivableintercompany                                                         |                                           |                              | 60,249,448  |                       |             |                            |             |              | 59,356,707  |                    |            
|Investments in subsidiaries                                                                    |                                           |                              | 195,442,428 |                       |             |                            |             |              | 5,528,867   |                    |            
|Properties, net                                                                                |                                           |                              | 8,652,124   |                       |             | 349,920,309                |             |              | 122,879,095 |                    |            
|Intangible asset derived from the actuarial computation of labor obligations and other assets. |                                           |                              | 17,342,837  |                       |             | 106,204,710                |             |              | 6,126,360   |                    |            
|                                                                                               |                                           |                              |             |                       |             |                            |             |              |             |                    |            
|                                                                                               |                                           | Total assets                 |             | Ps.                   | 343,526,782 |                            | Ps.         | 648,746,687  |             | Ps.                | 264,336,092
|                                                                                               |                                           |                              |             |                       |             |                            |             |              |             |                    |            
|LIABILITIES                                                                                    |                                           |                              |             |                       |             |                            |             |              |             |                    |            
|Current liabilities:                                                                           |                                           |                              |             |                       |             |                            |             |              |             |                    |            
|                                                                                               | Current portion of long-term debt         |                              | Ps.         | 31,569,249            |             | Ps.                        | 14,488,558  |              | Ps.         | 19,897,049         |            
|                                                                                               | Accounts payableintercompany             |                              |             | 102,979,438           |             |                            | 16,055,201  |              |             | 21,889,651         |            
|                                                                                               | Other current liabilities                 |                              |             | 6,362,039             |             |                            | 50,556,040  |              |             | 27,102,888         |            
|                                                                                               |                                           |                              |             |                       |             |                            |             |              |             |                    |            
|                                                                                               |                                           | Total current liabilities    |             |                       | 140,910,726 |                            |             | 81,099,799   |             |                    | 68,889,588 
|Long-term debt                                                                                 |                                           |                              | 73,993,830  |                       |             | 60,042,643                 |             |              | 129,235,310 |                    |            
|Long-term liabilities intercompany                                                             |                                           |                              |             |                       |             | 60,823,708                 |             |              |             |                    |            
|Sale of future accounts receivable                                                             |                                           |                              |             |                       |             | 52,450,710                 |             |              |             |                    |            
|Reserve for retirement payments, pensions, indemnities, sundry creditors, others               |                                           |                              | 27,660,297  |                       |             | 198,093,070                |             |              | 65,246,197  |                    |            
|                                                                                               |                                           |                              |             |                       |             |                            |             |              |             |                    |            
|Total liabilities                                                                              |                                           |                              | 242,564,853 |                       |             | 452,509,930                |             |              | 263,371,095 |                    |            
|                                                                                               |                                           |                              |             |                       |             |                            |             |              |             |                    |            
|EQUITY                                                                                         |                                           |                              |             |                       |             |                            |             |              |             |                    |            
|Equity accounts                                                                                |                                           |                              | (87,008,288 | )                     |             | 82,427,810                 |             |              | (10,385,613 | )                  |            
|Revaluation surplus                                                                            |                                           |                              | 187,970,217 |                       |             | 113,808,947                |             |              | 11,350,610  |                    |            
|                                                                                               |                                           |                              |             |                       |             |                            |             |              |             |                    |            
|                                                                                               |                                           |                              | 100,961,929 |                       |             | 196,236,757                |             |              | 964,997     |                    |            
|                                                                                               |                                           |                              |             |                       |             |                            |             |              |             |                    |            
|                                                                                               |                                           | Total liabilities and equity |             | Ps.                   | 343,526,782 |                            | Ps.         | 648,746,687  |             | Ps.                | 264,336,092
|                                                                                               |                                           |                              |             |                       |             |                            |             |              |             |                    |            

F-86

---



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS        For The Years Ended December 31, 2002, 2001 and 2000        (In thousands of pesos and thousands of U.S. dollars)

SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

BALANCE SHEET
  
As of December 31, 2001

|                                                                                              |                                           | Corporate                    |             | Subsidiary
Guarantors |             | Non-Guarantor
Subsidiaries |            | Eliminations |            | PEMEX
Consolidated |            
|--------------------------------------------------------------------------------------------- | ----------------------------------------- | ---------------------------- | ----------- | --------------------- | ----------- | -------------------------- | ---------- | ------------ | ---------- | ------------------ | -----------
|ASSETS                                                                                        |                                           |                              |             |                       |             |                            |            |              |            |                    |            
|Current assets:                                                                               |                                           |                              |             |                       |             |                            |            |              |            |                    |            
|                                                                                              | Cash and cash equivalents                 |                              | Ps.         | 5,522,511             |             | Ps.                        | 722,477    |              | Ps.        | 8,196,876          |            
|                                                                                              | Accounts, notes receivable and other, net |                              |             | 2,699,390             |             |                            | 94,357,062 |              |            | 23,416,641         |            
|                                                                                              | Inventories, net                          |                              |             | 165,166               |             |                            | 14,222,954 |              |            | 2,834,594          |            
|                                                                                              |                                           |                              |             |                       |             |                            |            |              |            |                    |            
|                                                                                              |                                           | Total current assets         |             |                       | 8,387,067   |                            |            | 109,302,493  |            |                    | 34,448,111 
|Long term debt receivable  intercompany                                                      |                                           |                              | 50,509,012  |                       |             |                            |            |              | 63,413,676 |                    |            
|Investments in subsidiaries                                                                   |                                           |                              | 178,487,519 |                       |             |                            |            |              | 4,924,513  |                    |            
|Properties, net                                                                               |                                           |                              | 8,826,710   |                       |             | 335,022,388                |            |              | 63,064,168 |                    |            
|Intangible asset derived from the actuarial computation of labor obligations and other assets |                                           |                              | 12,468,275  |                       |             | 95,749,586                 |            |              | 4,526,275  |                    |            
|                                                                                              |                                           |                              |             |                       |             |                            |            |              |            |                    |            
|                                                                                              |                                           | Total assets                 |             | Ps.                   | 258,678,583 |                            | Ps.        | 540,074,467  |            | Ps.                | 170,376,743
|                                                                                              |                                           |                              |             |                       |             |                            |            |              |            |                    |            
|LIABILITIES                                                                                   |                                           |                              |             |                       |             |                            |            |              |            |                    |            
|Current liabilities:                                                                          |                                           |                              |             |                       |             |                            |            |              |            |                    |            
|                                                                                              | Current portion of long-term debt         |                              | Ps.         | 28,328,581            |             | Ps.                        | 12,724,756 |              | Ps.        | 14,654,660         |            
|                                                                                              | Accounts payable  intercompany           |                              |             | 16,290,049            |             |                            | 12,017,704 |              |            | 13,163,044         |            
|                                                                                              | Other current liabilities                 |                              |             | 4,324,874             |             |                            | 23,938,251 |              |            | 19,580,324         |            
|                                                                                              |                                           |                              |             |                       |             |                            |            |              |            |                    |            
|                                                                                              |                                           | Total current liabilities    |             |                       | 48,943,504  |                            |            | 48,680,711   |            |                    | 47,398,028 
|Long-term debt                                                                                |                                           |                              | 67,730,850  |                       |             | 113,673,593                |            |              | 61,290,605 |                    |            
|Sale of future accounts receivable                                                            |                                           |                              |             |                       |             | 48,923,317                 |            |              |            |                    |            
|Reserve for retirement payments, pensions, indemnities, sundry creditors, and others          |                                           |                              | 21,233,452  |                       |             | 157,797,694                |            |              | 59,179,262 |                    |            
|                                                                                              |                                           |                              |             |                       |             |                            |            |              |            |                    |            
|                                                                                              |                                           | Total liabilities            |             |                       | 137,907,806 |                            |            | 369,075,315  |            |                    | 167,867,895
|                                                                                              |                                           |                              |             |                       |             |                            |            |              |            |                    |            
|EQUITY                                                                                        |                                           |                              |             |                       |             |                            |            |              |            |                    |            
|Equity accounts                                                                               |                                           |                              | (60,610,938 | )                     |             | 65,873,943                 |            |              | (9,671,154 | )                  |            
|Revaluation surplus                                                                           |                                           |                              | 181,381,715 |                       |             | 105,125,209                |            |              | 12,180,002 |                    |            
|                                                                                              |                                           |                              |             |                       |             |                            |            |              |            |                    |            
|                                                                                              |                                           |                              | 120,770,777 |                       |             | 170,999,152                |            |              | 2,508,848  |                    |            
|                                                                                              |                                           |                              |             |                       |             |                            |            |              |            |                    |            
|                                                                                              |                                           | Total liabilities and equity |             | Ps.                   | 258,678,583 |                            | Ps.        | 540,074,467  |            | Ps.                | 170,376,743
|                                                                                              |                                           |                              |             |                       |             |                            |            |              |            |                    |            

F-87

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS        For The Years Ended December 31, 2002, 2001 and 2000        (In thousands of pesos and thousands of U.S. dollars)

SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

STATEMENT OF INCOME
   
For the year ended December 31, 2002

|                                                                                                     |                                                   | Corporate                          |             | Subsidiary
Guarantors |            | Non-Guarantor
Subsidiaries |             | Eliminations |             | PEMEX
Consolidated |            
|---------------------------------------------------------------------------------------------------- | ------------------------------------------------- | ---------------------------------- | ----------- | --------------------- | ---------- | -------------------------- | ----------- | ------------ | ----------- | ------------------ | -----------
|Net sales                                                                                            |                                                   | Ps.                                | 17,343,164  |                       | Ps.        | 628,994,838                |             | Ps.          | 216,814,667 |                    | (Ps.       
|Other revenues                                                                                       |                                                   |                                    | 2,122,990   |                       |            | 11,218,605                 |             |              | 17,123,003  |                    |            
|                                                                                                     |                                                   |                                    |             |                       |            |                            |             |              |             |                    |            
|Total revenues                                                                                       |                                                   |                                    | 19,466,154  |                       |            | 640,213,443                |             |              | 233,937,670 |                    |            
|Costs and operating expenses:                                                                        |                                                   |                                    |             |                       |            |                            |             |              |             |                    |            
|                                                                                                     | Cost of sales                                     |                                    |             | 92,497                |            |                            | 303,094,263 |              |             | 219,731,211        |            
|                                                                                                     | Transportation and distribution expenses          |                                    |             |                       |            |                            | 14,339,416  |              |             | 869,252            |            
|                                                                                                     | Administrative expenses                           |                                    |             | 16,747,488            |            |                            | 28,706,760  |              |             | 4,499,745          |            
|                                                                                                     | Other expenses                                    |                                    |             | 5,100,721             |            |                            | 18,758,721  |              |             | 16,227,746         |            
|                                                                                                     |                                                   |                                    |             |                       |            |                            |             |              |             |                    |            
|                                                                                                     |                                                   | Total costs and operating expenses |             |                       | 21,940,706 |                            |             | 364,899,160  |             |                    | 241,327,954
|Equity participation in subsidiaries                                                                 |                                                   |                                    | (29,609,202 | )                     |            |                            |             |              |             |                    |            
|Capitalization of Master Trust operations and others                                                 |                                                   |                                    |             |                       |            |                            |             |              | (2,249,815  | )                  |            
|(Loss) income before hydrocarbon extraction duties, and other special tax on production and services |                                                   |                                    | (32,083,754 | )                     |            | 275,314,283                |             |              | (9,640,099  | )                  |            
|                                                                                                     | Hydrocarbon extraction duties and other           |                                    |             |                       |            |                            | 178,322,178 |              |             | 776,871            |            
|                                                                                                     | Special tax on production and services (IEPS Tax) |                                    |             |                       |            |                            | 114,491,456 |              |             |                    |            
|                                                                                                     |                                                   |                                    |             |                       |            |                            |             |              |             |                    |            
|                                                                                                     |                                                   |                                    |             |                       |            | 292,813,634                |             |              | 776,871     |                    |            
|                                                                                                     |                                                   |                                    |             |                       |            |                            |             |              |             |                    |            
|Net (loss) income for the year                                                                       |                                                   | (Ps.                               | 32,083,754  | )                     | (Ps.       | 17,499,351                 | )           | (Ps.         | 10,416,970  | )                  | Ps.        
|                                                                                                     |                                                   |                                    |             |                       |            |                            |             |              |             |                    |            

F-88

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS        For The Years Ended December 31, 2002, 2001 and 2000        (In thousands of pesos and thousands of U.S. dollars)

SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

STATEMENT OF INCOME
   
For the year ended December 31, 2001

|                                                                                                     |                                                   | Corporate                          |            | Subsidiary
Guarantors |             | Non-Guarantor
Subsidiaries |             | Eliminations     |              | PEMEX
Consolidated |            
|---------------------------------------------------------------------------------------------------- | ------------------------------------------------- | ---------------------------------- | ---------- | --------------------- | ----------- | -------------------------- | ----------- | ---------------- | ------------ | ------------------ | -----------
|Net sales                                                                                            |                                                   | Ps. 12,339,892                     |            | Ps. 605,823,004       |             | Ps. 199,974,543            |             | (Ps. 372,807,277 | )            | Ps. 445,330,162    |            
|Other revenues                                                                                       |                                                   | 2,826,908                          |            | 9,759,540             |             | 12,718,685                 |             | (13,250,035      | )            | 12,055,098         |            
|                                                                                                     |                                                   |                                    |            |                       |             |                            |             |                  |              |                    |            
|Total revenues                                                                                       |                                                   | 15,166,800                         |            | 615,582,544           |             | 212,693,228                |             | (386,057,312     | )            | 457,385,260        |            
|Costs and operating expenses:                                                                        |                                                   |                                    |            |                       |             |                            |             |                  |              |                    |            
|                                                                                                     | Cost of sales                                     |                                    |            |                       | 320,770,253 |                            | 208,519,631 |                  | (363,975,363 | )                  | 165,314,521
|                                                                                                     | Transportation and distribution expenses          |                                    |            |                       | 13,208,914  |                            | 533,777     |                  | (154,209     | )                  | 13,588,482 
|                                                                                                     | Administrative expenses                           |                                    | 15,465,295 |                       | 21,392,241  |                            | 4,118,801   |                  | (12,950,999  | )                  | 28,025,338 
|                                                                                                     | Other expenses                                    |                                    | 1,544,954  |                       | 17,669,179  |                            | 5,550,054   |                  | (5,010,244   | )                  | 19,753,943 
|                                                                                                     |                                                   |                                    |            |                       |             |                            |             |                  |              |                    |            
|                                                                                                     |                                                   | Total costs and operating expenses |            | 17,010,249            |             | 373,040,587                |             | 218,722,263      |              | (382,090,815       | )          
|Equity participation in subsidiaries                                                                 |                                                   | (29,034,047                        | )          |                       |             |                            |             | 29,034,047       |              |                    |            
|Capitalization of Master Trust operations and others                                                 |                                                   |                                    |            |                       |             | (1,833,128                 | )           | 1,833,128        |              |                    |            
|Cumulative effect of adoption of new financial instruments standard                                  |                                                   | (1,301,451                         | )          | (29,796               | )           |                            |             |                  |              | (1,331,247         | )          
|                                                                                                     |                                                   |                                    |            |                       |             |                            |             |                  |              |                    |            
|(Loss) income before hydrocarbon extraction duties, and other special tax on production and services |                                                   | (32,178,947                        | )          | 242,512,161           |             | (7,862,163                 | )           | 26,900,678       |              | 229,371,729        |            
|                                                                                                     | Hydrocarbon extraction duties and other           |                                    |            |                       | 167,502,566 |                            | 761,021     |                  |              |                    | 168,263,587
|                                                                                                     | Special tax on production and services (IEPS Tax) |                                    |            |                       | 95,198,729  |                            |             |                  |              |                    | 95,198,729 
|                                                                                                     |                                                   |                                    |            |                       |             |                            |             |                  |              |                    |            
|                                                                                                     |                                                   |                                    |            | 262,701,295           |             | 761,021                    |             |                  |              | 263,462,316        |            
|                                                                                                     |                                                   |                                    |            |                       |             |                            |             |                  |              |                    |            
|Net (loss) income for the year                                                                       |                                                   | (Ps. 32,178,947                    | )          | (Ps. 20,189,134       | )           | (Ps. 8,623,184             | )           | Ps. 26,900,678   |              | (Ps. 34,090,587    | )          
|                                                                                                     |                                                   |                                    |            |                       |             |                            |             |                  |              |                    |            

F-89

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS        For The Years Ended December 31, 2002, 2001 and 2000        (In thousands of pesos and thousands of U.S. dollars)

SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

STATEMENT OF INCOME
   
For the year ended December 31, 2000

|                                                                                                     |                                                   | 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 Tax) |                                    |             |                       |            |                            | 69,556,520  |              |             |                    |            
|                                                                                                     |                                                   |                                    |             |                       |            |                            |             |              |             |                    |            
|                                                                                                     |                                                   |                                    |             |                       |            | 292,600,873                |             |              | 1,042,336   |                    |            
|                                                                                                     |                                                   |                                    |             |                       |            |                            |             |              |             |                    |            
|Net (loss) income for the year                                                                       |                                                   | (Ps.                               | 20,547,372  | )                     | (Ps.       | 16,327,684                 | )           | (Ps.         | 1,246,491   | )                  | Ps.        
|                                                                                                     |                                                   |                                    |             |                       |            |                            |             |              |             |                    |            

F-90

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For The Years Ended December 31, 2002, 2001 and 2000

(In thousands of pesos and thousands of U.S. dollars)

SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
STATEMENT OF CHANGES IN FINANCIAL POSITION
For the year ended December 31, 2002

|                                                   |                                                 | Corporate |             | Subsidiary
Guarantors |      | Non-Guarantor
Subsidiaries |             | Eliminations |             | PEMEX
Consolidated |    
|-------------------------------------------------- | ----------------------------------------------- | --------- | ----------- | --------------------- | ---- | -------------------------- | ----------- | ------------ | ----------- | ------------------ | ---
|Funds provided by (used in) operating activities   |                                                 | Ps.       | 38,417,242  |                       | (Ps. | 28,160,373                 | )           | (Ps.         | 13,932,730  | )                  | Ps.
|                                                   |                                                 |           |             |                       |      |                            |             |              |             |                    |    
|Financing activities:                              |                                                 |           |             |                       |      |                            |             |              |             |                    |    
|                                                   | Sale of future accounts receivable              |           |             |                       |      |                            | 3,527,393   |              |             |                    |    
|                                                   | Long-term debt                                  |           |             | 9,503,647             |      |                            | 21,204,501  |              |             | 70,050,414         |    
|                                                   | Net income (loss) passed to Petróleos Mexicanos |           |             | (27,916,322           | )    |                            | 17,499,351  |              |             | 10,416,971         |    
|                                                   | Other changes                                   |           |             | 7,649,402             |      |                            | 10,615,528  |              |             | 9,149,140          |    
|                                                   |                                                 |           |             |                       |      |                            |             |              |             |                    |    
|Funds provided by (used in) financing activities   |                                                 |           | (10,763,273 | )                     |      | 52,846,773                 |             |              | 89,616,525  |                    |    
|                                                   |                                                 |           |             |                       |      |                            |             |              |             |                    |    
|Investing activities:                              |                                                 |           |             |                       |      |                            |             |              |             |                    |    
|                                                   | Increase in fixed assets, net                   |           |             | 6,064,180             |      |                            | (24,563,120 | )            |             | (62,531,379        | )  
|                                                   | Investments in subsidiaries                     |           |             | (16,954,909           | )    |                            |             |              |             | (604,354           | )  
|                                                   |                                                 |           |             |                       |      |                            |             |              |             |                    |    
|Funds provided by (used in) investing activities   |                                                 |           | (10,890,729 | )                     |      | (24,563,120                | )           |              | (63,135,733 | )                  |    
|                                                   |                                                 |           |             |                       |      |                            |             |              |             |                    |    
|(Decrease) increase in cash and cash equivalents   |                                                 |           | 16,763,240  |                       |      | 123,280                    |             |              | 12,548,062  |                    |    
|Cash and cash equivalents at beginning of the year |                                                 |           | 5,522,511   |                       |      | 722,477                    |             |              | 8,196,876   |                    |    
|                                                   |                                                 |           |             |                       |      |                            |             |              |             |                    |    
|Cash and cash equivalents at the end of the year   |                                                 | Ps.       | 22,285,751  |                       | Ps.  | 845,757                    |             | Ps.          | 20,744,938  |                    | Ps.
|                                                   |                                                 |           |             |                       |      |                            |             |              |             |                    |    

F-91

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For The Years Ended December 31, 2002, 2001 and 2000

(In thousands of pesos and thousands of U.S. dollars)

SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
STATEMENT OF CHANGES IN FINANCIAL POSITION
For the year ended December 31, 2001

|                                                   |                                                 | Corporate |              | Subsidiary
Guarantors |     | Non-Guarantor
Subsidiaries |             | Eliminations |              | PEMEX
Consolidated |     
|-------------------------------------------------- | ----------------------------------------------- | --------- | ------------ | --------------------- | --- | -------------------------- | ----------- | ------------ | ------------ | ------------------ | ----
|Funds provided by (used in) operating activities   |                                                 | Ps.       | 93,512,424   |                       | Ps. | 9,070,449                  |             | Ps.          | 114,718,332  |                    | (Ps.
|                                                   |                                                 |           |              |                       |     |                            |             |              |              |                    |     
|Financing activities:                              |                                                 |           |              |                       |     |                            |             |              |              |                    |     
|                                                   | Sale of future accounts receivable              |           |              |                       |     |                            | (3,053,256  | )            |              |                    |     
|                                                   | Long-term debt                                  |           |              | (79,144,359           | )   |                            | (2,925,553  | )            |              | (15,509,050        | )   
|                                                   | Net income (loss) passed to Petróleos Mexicanos |           |              | (27,461,110           | )   |                            | 18,837,927  |              |              | 8,623,183          |     
|                                                   | Other changes                                   |           |              | (5,563,799            | )   |                            | 15,127,018  |              |              | (3,306,297         | )   
|                                                   |                                                 |           |              |                       |     |                            |             |              |              |                    |     
|Funds provided by (used in) financing activities   |                                                 |           | (112,169,268 | )                     |     | 27,986,136                 |             |              | (10,192,164  | )                  |     
|                                                   |                                                 |           |              |                       |     |                            |             |              |              |                    |     
|Investing activities:                              |                                                 |           |              |                       |     |                            |             |              |              |                    |     
|                                                   | Increase in fixed assets, net                   |           |              | 9,751,146             |     |                            | (37,786,710 | )            |              | (108,275,327       | )   
|                                                   | Investments in subsidiaries                     |           |              |                       |     |                            |             |              |              |                    |     
|                                                   |                                                 |           |              |                       |     |                            |             |              |              |                    |     
|Funds provided by (used in) investing activities   |                                                 |           | 9,751,146    |                       |     | (37,786,710                | )           |              | (108,275,327 | )                  |     
|                                                   |                                                 |           |              |                       |     |                            |             |              |              |                    |     
|(Decrease) increase in cash and cash equivalents   |                                                 |           | (8,905,698   | )                     |     | (730,125                   | )           |              | (3,749,159   | )                  |     
|Cash and cash equivalents at beginning of the year |                                                 |           | 14,428,209   |                       |     | 1,452,602                  |             |              | 11,946,035   |                    |     
|                                                   |                                                 |           |              |                       |     |                            |             |              |              |                    |     
|Cash and cash equivalents at the end of the year   |                                                 | Ps.       | 5,522,511    |                       | Ps. | 722,477                    |             | Ps.          | 8,196,876    |                    | Ps. 
|                                                   |                                                 |           |              |                       |     |                            |             |              |              |                    |     

F-92

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For The Years Ended December 31, 2002, 2001 and 2000

(In thousands of pesos and thousands of U.S. dollars)

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                                   |           |            | (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-93

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For The Years Ended December 31, 2002, 2001 and 2000

(In thousands of pesos and thousands of U.S. dollars)

21. PIDIREGAS liabilities and the Pemex Project Funding Master Trust ("Master Trust")

The Master Trust, a consolidated entity which is a business trust, was organized under the laws of Delaware on November 10, 1998. On December 31,
1998, PEMEX transferred all assets and liabilities related to PIDIREGAS for an amount equaling Ps. 12,104,010 to the Master Trust. The main objective of the Master Trust is to administer financial
resources related to PIDIREGAS, such financial resources being designated by PEMEX for that purpose, by assuming payment obligations under contracts relating to PIDIREGAS and acting as the borrower
under financing arrangements for PIDIREGAS.

Under
an Assignment and Indemnity Agreement dated November 10, 1998, among Petróleos Mexicanos, the Master Trust and the Subsidiary Guarantors,
Petróleos Mexicanos and the Subsidiary Guarantors have certain obligations to the Master Trust with respect to the liabilities incurred by the Master Trust in connection with PIDIREGAS.
These obligations include:



The
Master Trust is consolidated in the financial statements of PEMEX for each of the periods presented 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 Master 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.

F-94

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For The Years Ended December 31, 2002, 2001 and 2000

(In thousands of pesos and thousands of U.S. dollars)

The following consolidating information presents condensed consolidating balance sheets at December 31, 2002 and 2001 and condensed consolidating
statements of operations and statements of changes in financial position for the years ended December 31, 2002, 2001 and 2000 of Petróleos Mexicanos, Pemex-Exploration and
Production, Pemex-Refining, Pemex-Gas and Basic Petrochemicals, 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-06BIS "A" section A (see Notes 2 b) and 15 to the consolidated financial statements), except that
in the following condensed financial information, the Master 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 Master Trust is full and unconditional. The guaranties by the Subsidiary Guarantors of Petróleos Mexicanos' guaranty of the Master Trust's
payment obligations are full and unconditional and joint and several.

Petróleos
Mexicanos and the Master Trust are the only entities authorized to contract debt, and thus all guaranteed debt is held by these entities.

F-95

---



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS        For The Years Ended December 31, 2002, 2001 and 2000        (In thousands of pesos and thousands of U.S. dollars)

SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
BALANCE SHEET
As of December 31, 2002

|                                                                                              |                                           | Corporate                    |             | Master Trust |             | Subsidiary
Guarantors |            | Non-Guarantor
Subsidiaries |             | Eliminations |             | PEMEX
Consolidated |           
|--------------------------------------------------------------------------------------------- | ----------------------------------------- | ---------------------------- | ----------- | ------------ | ----------- | --------------------- | ---------- | -------------------------- | ----------- | ------------ | ----------- | ------------------ | ----------
|ASSETS                                                                                        |                                           |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|Current assets:                                                                               |                                           |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|                                                                                              | Cash and cash equivalents                 |                              | Ps.         | 22,285,751   |             | Ps.                   | 15,644,247 |                            | Ps.         | 845,756      |             | Ps.                | 5,100,692 
|                                                                                              | Accounts, notes receivable and other, net |                              |             | 39,163,582   |             |                       | 30,661,336 |                            |             | 170,962,340  |             |                    | 15,659,926
|                                                                                              | Inventories, net                          |                              |             | 390,612      |             |                       |            |                            |             | 20,813,572   |             |                    | 3,378,862 
|                                                                                              |                                           |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|                                                                                              |                                           | Total current assets         |             |              | 61,839,945  |                       |            | 46,305,583                 |             |              | 192,621,668 |                    |           
|Long-term debt receivable-intercompany                                                        |                                           |                              | 60,249,448  |              |             | 59,356,707            |            |                            |             |              |             |                    |           
|Investments in subsidiaries                                                                   |                                           |                              | 195,442,428 |              |             |                       |            |                            |             |              |             | 5,528,867          |           
|Properties, net                                                                               |                                           |                              | 8,652,124   |              |             | 105,711,140           |            |                            | 349,920,309 |              |             | 17,167,955         |           
|Intangible asset derived from the actuarial computation of labor obligations and other assets |                                           |                              | 17,342,837  |              |             | 82,966                |            |                            | 106,204,710 |              |             | 6,043,394          |           
|                                                                                              |                                           |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|                                                                                              |                                           | Total assets                 |             | Ps.          | 343,526,782 |                       | Ps.        | 211,456,396                |             | Ps.          | 648,746,687 |                    | Ps.       
|                                                                                              |                                           |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|LIABILITIES                                                                                   |                                           |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|Current liabilities:                                                                          |                                           |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|                                                                                              | Current portion of long-term debt         |                              | Ps.         | 31,569,249   |             | Ps.                   | 18,617,799 |                            | Ps.         | 14,488,558   |             | Ps.                | 1,279,250 
|                                                                                              | Accounts payable-intercompany             |                              |             | 102,979,438  |             |                       | 461,385    |                            |             | 16,055,201   |             |                    | 21,428,266
|                                                                                              | Other current liabilities                 |                              |             | 6,362,039    |             |                       | 20,238,532 |                            |             | 50,556,040   |             |                    | 6,864,356 
|                                                                                              |                                           |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|                                                                                              |                                           | Total current liabilities    |             |              | 140,910,726 |                       |            | 39,317,716                 |             |              | 81,099,799  |                    |           
|Long-term debt                                                                                |                                           |                              | 73,993,830  |              |             | 129,028,336           |            |                            | 60,042,643  |              |             | 206,974            |           
|                                                                                              |                                           |                              |             |              |             |                       |            |                            | 60,823,708  |              |             |                    |           
|Sale of future accounts receivable                                                            |                                           |                              |             |              |             |                       |            |                            | 52,450,710  |              |             |                    |           
|Reserve for retirement payments, pensions, indemnities sundry creditors, and others           |                                           |                              | 27,660,297  |              |             | 43,110,344            |            |                            | 198,093,070 |              |             | 22,135,853         |           
|                                                                                              |                                           |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|                                                                                              |                                           | Total liabilities            |             |              | 242,564,853 |                       |            | 211,456,396                |             |              | 452,509,930 |                    |           
|                                                                                              |                                           |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|EQUITY                                                                                        |                                           |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|Equity accounts                                                                               |                                           |                              | (87,008,288 | )            |             |                       |            |                            | 82,427,810  |              |             | (10,385,613        | )         
|Revaluation surplus                                                                           |                                           |                              | 187,970,217 |              |             |                       |            |                            | 113,808,947 |              |             | 11,350,610         |           
|                                                                                              |                                           |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|                                                                                              |                                           |                              | 100,961,929 |              |             |                       |            |                            | 196,236,757 |              |             | 964,997            |           
|                                                                                              |                                           |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|                                                                                              |                                           | Total liabilities and equity |             | Ps.          | 343,526,782 |                       | Ps.        | 211,456,396                |             | Ps.          | 648,746,687 |                    | Ps.       
|                                                                                              |                                           |                              |             |              |             |                       |            |                            |             |              |             |                    |           

F-96

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS        For The Years Ended December 31, 2002, 2001 and 2000        (In thousands of pesos and thousands of U.S. dollars)

SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
BALANCE SHEET
As of December 31, 2001

|                                                                                              |                                           | Corporate                    |             | Master Trust |             | Subsidiary
Guarantors |           | Non-Guarantor
Subsidiaries |             | Eliminations |             | PEMEX
Consolidated |           
|--------------------------------------------------------------------------------------------- | ----------------------------------------- | ---------------------------- | ----------- | ------------ | ----------- | --------------------- | --------- | -------------------------- | ----------- | ------------ | ----------- | ------------------ | ----------
|ASSETS                                                                                        |                                           |                              |             |              |             |                       |           |                            |             |              |             |                    |           
|Current assets:                                                                               |                                           |                              |             |              |             |                       |           |                            |             |              |             |                    |           
|                                                                                              | Cash and cash equivalents                 |                              | Ps.         | 5,522,511    |             | Ps.                   | 5,288,454 |                            | Ps.         | 722,477      |             | Ps.                | 2,908,422 
|                                                                                              | Accounts, notes receivable and other, net |                              |             | 2,699,390    |             |                       | 7,804,623 |                            |             | 94,357,062   |             |                    | 15,612,018
|                                                                                              | Inventories, net                          |                              |             | 165,166      |             |                       |           |                            |             | 14,222,954   |             |                    | 2,834,594 
|                                                                                              |                                           |                              |             |              |             |                       |           |                            |             |              |             |                    |           
|                                                                                              |                                           | Total current assets         |             |              | 8,387,067   |                       |           | 13,093,077                 |             |              | 109,302,493 |                    |           
|Long-term debt receivable-intercompany                                                        |                                           |                              | 50,509,012  |              |             | 63,413,676            |           |                            |             |              |             |                    |           
|Investments in subsidiaries                                                                   |                                           |                              | 178,487,519 |              |             |                       |           |                            |             |              |             | 4,924,513          |           
|Properties, net                                                                               |                                           |                              | 8,826,710   |              |             | 44,326,188            |           |                            | 335,022,388 |              |             | 18,737,980         |           
|Intangible asset derived from the actuarial computation of labor obligations and other assets |                                           |                              | 12,468,275  |              |             | 1,395,274             |           |                            | 95,749,586  |              |             | 3,131,001          |           
|                                                                                              |                                           |                              |             |              |             |                       |           |                            |             |              |             |                    |           
|                                                                                              |                                           | Total assets                 |             | Ps.          | 258,678,583 |                       | Ps.       | 122,228,215                |             | Ps.          | 540,074,467 |                    | Ps.       
|                                                                                              |                                           |                              |             |              |             |                       |           |                            |             |              |             |                    |           
|LIABILITIES                                                                                   |                                           |                              |             |              |             |                       |           |                            |             |              |             |                    |           
|Current liabilities:                                                                          |                                           |                              |             |              |             |                       |           |                            |             |              |             |                    |           
|                                                                                              | Current portion of long-term debt         |                              | Ps.         | 28,328,581   |             | Ps.                   | 8,707,639 |                            | Ps.         | 12,724,756   |             | Ps.                | 5,947,021 
|                                                                                              | Accounts payable-intercompany             |                              |             | 16,290,049   |             |                       | 436,459   |                            |             | 12,017,704   |             |                    | 12,726,585
|                                                                                              | Other current liabilities                 |                              |             | 4,324,874    |             |                       | 9,468,451 |                            |             | 23,938,251   |             |                    | 10,111,873
|                                                                                              |                                           |                              |             |              |             |                       |           |                            |             |              |             |                    |           
|                                                                                              |                                           | Total current liabilities    |             |              | 48,943,504  |                       |           | 18,612,549                 |             |              | 48,680,711  |                    |           
|Long-term debt                                                                                |                                           |                              | 67,730,850  |              |             | 61,041,007            |           |                            | 113,673,593 |              |             | 249,598            |           
|Sale of future accounts receivable                                                            |                                           |                              |             |              |             |                       |           |                            | 48,923,317  |              |             |                    |           
|Reserve for retirement payments, pensions, indemnities sundry creditors, and others           |                                           |                              | 21,233,452  |              |             | 42,574,659            |           |                            | 157,797,694 |              |             | 16,604,603         |           
|                                                                                              |                                           |                              |             |              |             |                       |           |                            |             |              |             |                    |           
|                                                                                              |                                           | Total liabilities            |             |              | 137,907,806 |                       |           | 122,228,215                |             |              | 369,075,315 |                    |           
|                                                                                              |                                           |                              |             |              |             |                       |           |                            |             |              |             |                    |           
|EQUITY                                                                                        |                                           |                              |             |              |             |                       |           |                            |             |              |             |                    |           
|Equity accounts                                                                               |                                           |                              | (60,610,938 | )            |             |                       |           |                            | 65,873,943  |              |             | (9,671,154         | )         
|Revaluation surplus                                                                           |                                           |                              | 181,381,715 |              |             |                       |           |                            | 105,125,209 |              |             | 12,180,002         |           
|                                                                                              |                                           |                              |             |              |             |                       |           |                            |             |              |             |                    |           
|                                                                                              |                                           |                              | 120,770,777 |              |             |                       |           |                            | 170,999,152 |              |             | 2,508,848          |           
|                                                                                              |                                           |                              |             |              |             |                       |           |                            |             |              |             |                    |           
|                                                                                              |                                           | Total liabilities and equity |             | Ps.          | 258,678,583 |                       | Ps.       | 122,228,215                |             | Ps.          | 540,074,467 |                    | Ps.       
|                                                                                              |                                           |                              |             |              |             |                       |           |                            |             |              |             |                    |           

F-97

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS        For The Years Ended December 31, 2002, 2001 and 2000        (In thousands of pesos and thousands of U.S. dollars)

SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
STATEMENT OF INCOME
For the year ended December 31, 2002

|                                                                                                        |                                                   | Corporate                          |             | Master Trust |            | Subsidiary
Guarantors |            | Non-Guarantor
Subsidiaries |             | Eliminations |             | PEMEX
Consolidated |            
|------------------------------------------------------------------------------------------------------- | ------------------------------------------------- | ---------------------------------- | ----------- | ------------ | ---------- | --------------------- | ---------- | -------------------------- | ----------- | ------------ | ----------- | ------------------ | -----------
|Net sales                                                                                               |                                                   | Ps.                                | 17,343,164  |              | Ps.        |                       |            | Ps.                        | 628,994,838 |              | Ps.         | 216,814,667        |            
|Other revenues                                                                                          |                                                   |                                    | 2,122,990   |              |            | 12,453,792            |            |                            | 11,218,605  |              |             | 4,669,211          |            
|                                                                                                        |                                                   |                                    |             |              |            |                       |            |                            |             |              |             |                    |            
|Total revenues                                                                                          |                                                   |                                    | 19,466,154  |              |            | 12,453,792            |            |                            | 640,213,443 |              |             | 221,483,878        |            
|                                                                                                        |                                                   |                                    |             |              |            |                       |            |                            |             |              |             |                    |            
|Costs and operating expenses:                                                                           |                                                   |                                    |             |              |            |                       |            |                            |             |              |             |                    |            
|                                                                                                        | Cost of sales                                     |                                    |             | 92,497       |            |                       |            |                            |             | 303,094,263  |             |                    | 219,731,211
|                                                                                                        | Transportation and distribution expenses          |                                    |             |              |            |                       |            |                            |             | 14,339,416   |             |                    | 869,252    
|                                                                                                        | Administrative expenses                           |                                    |             | 16,747,488   |            |                       | 33,416     |                            |             | 28,706,760   |             |                    | 4,466,329  
|                                                                                                        | Other expenses                                    |                                    |             | 5,100,721    |            |                       | 10,170,561 |                            |             | 18,758,721   |             |                    | 6,057,185  
|                                                                                                        |                                                   |                                    |             |              |            |                       |            |                            |             |              |             |                    |            
|                                                                                                        |                                                   | Total costs and operating expenses |             |              | 21,940,706 |                       |            | 10,203,977                 |             |              | 364,899,160 |                    |            
|Equity participation in subsidiaries                                                                    |                                                   |                                    | (29,609,202 | )            |            |                       |            |                            |             |              |             |                    |            
|Capitalization of Master Trust operations                                                               |                                                   |                                    |             |              |            | (2,249,815            | )          |                            |             |              |             |                    |            
|Cumulative effect of adoption of new financial instruments standard                                     |                                                   |                                    |             |              |            |                       |            |                            |             |              |             |                    |            
|                                                                                                        |                                                   |                                    |             |              |            |                       |            |                            |             |              |             |                    |            
|(Loss) income before hydrocarbon extraction duties and other and special tax on production and services |                                                   |                                    | (32,083,754 | )            |            |                       |            |                            | 275,314,283 |              |             | (9,640,099         | )          
|                                                                                                        | Hydrocarbon extraction duties and other           |                                    |             |              |            |                       |            |                            |             | 178,322,178  |             |                    | 776,871    
|                                                                                                        | Special tax on production and services (IEPS Tax) |                                    |             |              |            |                       |            |                            |             | 114,491,456  |             |                    |            
|                                                                                                        |                                                   |                                    |             |              |            |                       |            |                            |             |              |             |                    |            
|                                                                                                        |                                                   |                                    |             |              |            |                       |            |                            | 292,813,634 |              |             | 776,871            |            
|                                                                                                        |                                                   |                                    |             |              |            |                       |            |                            |             |              |             |                    |            
|Net (loss) income for the year                                                                          |                                                   | (Ps.                               | 32,083,754  | )            | Ps.        |                       |            | (Ps.                       | 17,499,351  | )            | (Ps.        | 10,416,970         | )          
|                                                                                                        |                                                   |                                    |             |              |            |                       |            |                            |             |              |             |                    |            

F-98

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS        For The Years Ended December 31, 2002, 2001 and 2000        (In thousands of pesos and thousands of U.S. dollars)

SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
STATEMENT OF INCOME
For the year ended December 31, 2001

|                                                                                                        |                                                   | Corporate                          |             | Master Trust |            | Subsidiary
Guarantors |           | Non-Guarantor
Subsidiaries |             | Eliminations |             | PEMEX
Consolidated |            
|------------------------------------------------------------------------------------------------------- | ------------------------------------------------- | ---------------------------------- | ----------- | ------------ | ---------- | --------------------- | --------- | -------------------------- | ----------- | ------------ | ----------- | ------------------ | -----------
|Net sales                                                                                               |                                                   | Ps.                                | 12,339,892  |              | Ps.        |                       |           | Ps.                        | 605,823,004 |              | Ps.         | 199,974,543        |            
|Other revenues                                                                                          |                                                   |                                    | 2,826,908   |              |            | 5,432,891             |           |                            | 9,759,540   |              |             | 7,285,794          |            
|                                                                                                        |                                                   |                                    |             |              |            |                       |           |                            |             |              |             |                    |            
|Total revenues                                                                                          |                                                   |                                    | 15,166,800  |              |            | 5,432,891             |           |                            | 615,582,544 |              |             | 207,260,337        |            
|                                                                                                        |                                                   |                                    |             |              |            |                       |           |                            |             |              |             |                    |            
|Costs and operating expenses:                                                                           |                                                   |                                    |             |              |            |                       |           |                            |             |              |             |                    |            
|                                                                                                        | Cost of sales                                     |                                    |             |              |            |                       |           |                            |             | 320,770,253  |             |                    | 208,519,631
|                                                                                                        | Transportation and distribution expenses          |                                    |             |              |            |                       |           |                            |             | 13,208,914   |             |                    | 533,777    
|                                                                                                        | Administrative expenses                           |                                    |             | 15,465,295   |            |                       | 16,169    |                            |             | 21,392,241   |             |                    | 4,102,632  
|                                                                                                        | Other expenses                                    |                                    |             | 1,544,954    |            |                       | 3,583,594 |                            |             | 17,669,179   |             |                    | 1,966,460  
|                                                                                                        |                                                   |                                    |             |              |            |                       |           |                            |             |              |             |                    |            
|                                                                                                        |                                                   | Total costs and operating expenses |             |              | 17,010,249 |                       |           | 3,599,763                  |             |              | 373,040,587 |                    |            
|Equity participation in subsidiaries                                                                    |                                                   |                                    | (29,034,047 | )            |            |                      |           |                            |             |              |             |                    |            
|Capitalization of Master Trust operations                                                               |                                                   |                                    |             |              |            | (1,833,128            | )         |                            |             |              |             |                    |            
|Cumulative effect of adoption of new financial instruments standard                                     |                                                   |                                    | (1,301,451  | )            |            |                       |           |                            | (29,796     | )            |             |                    |            
|                                                                                                        |                                                   |                                    |             |              |            |                       |           |                            |             |              |             |                    |            
|(Loss) income before hydrocarbon extraction duties and other and special tax on production and services |                                                   |                                    | (32,178,947 | )            |            |                       |           |                            | 242,512,161 |              |             | (7,862,163         | )          
|                                                                                                        | Hydrocarbon extraction duties and other           |                                    |             |              |            |                       |           |                            |             | 167,502,566  |             |                    | 761,021    
|                                                                                                        | Special tax on production and services (IEPS Tax) |                                    |             |              |            |                       |           |                            |             | 95,198,729   |             |                    |            
|                                                                                                        |                                                   |                                    |             |              |            |                       |           |                            |             |              |             |                    |            
|                                                                                                        |                                                   |                                    |             |              |            |                       |           |                            | 262,701,295 |              |             | 761,021            |            
|                                                                                                        |                                                   |                                    |             |              |            |                       |           |                            |             |              |             |                    |            
|Net (loss) income for the year                                                                          |                                                   | (Ps.                               | 32,178,947  | )            | Ps.        |                       |           | (Ps.                       | 20,189,134  | )            | (Ps.        | 8,623,184          | )          
|                                                                                                        |                                                   |                                    |             |              |            |                       |           |                            |             |              |             |                    |            

F-99

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For The Years Ended December 31, 2002, 2001 and 2000

(In thousands of pesos and thousands of U.S. dollars)

SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
STATEMENT OF INCOME
For the year ended December 31, 2000

|                                                                                                        |                                                   | 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 Master 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 Tax) |                                    |             |              |            |                       |           |                            |             | 69,556,520   |             |                    |            
|                                                                                                        |                                                   |                                    |             |              |            |                       |           |                            |             |              |             |                    |            
|                                                                                                        |                                                   |                                    |             |              |            |                       |           |                            | 292,600,873 |              |             | 1,042,336          |            
|                                                                                                        |                                                   |                                    |             |              |            |                       |           |                            |             |              |             |                    |            
|Net (loss) income for the year                                                                          |                                                   | (Ps.                               | 20,547,372  | )            | Ps.        |                       |           | (Ps.                       | 16,327,684  | )            | (Ps.        | 1,246,491          | )          
|                                                                                                        |                                                   |                                    |             |              |            |                       |           |                            |             |              |             |                    |            

F-100

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For The Years Ended December 31, 2002, 2001 and 2000

(In thousands of pesos and thousands of U.S. dollars)

SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
STATEMENT OF CHANGES IN FINANCIAL POSITION
For the year ended December 31, 2002

|                                                   |                                                 | Corporate |             | Master Trust |      | Subsidiary
Guarantors |             | Non-Guarantor
Subsidiaries |             | Eliminations |      | PEMEX
Consolidated |           
|-------------------------------------------------- | ----------------------------------------------- | --------- | ----------- | ------------ | ---- | --------------------- | ----------- | -------------------------- | ----------- | ------------ | ---- | ------------------ | ----------
|Funds (used in) provided by operating activities   |                                                 | Ps.       | 38,417,242  |              | (Ps. | 6,156,745             | )           | (Ps.                       | 28,160,373  | )            | (Ps. | 7,775,985          | )         
|                                                   |                                                 |           |             |              |      |                       |             |                            |             |              |      |                    |           
|Financing activities:                              |                                                 |           |             |              |      |                       |             |                            |             |              |      |                    |           
|                                                   | Sale of future accounts receivable              |           |             |              |      |                       |             |                            |             | 3,527,393    |      |                    |           
|                                                   | Long-term debt                                  |           |             | 9,503,647    |      |                       | 77,897,490  |                            |             | 21,204,501   |      |                    | (7,847,076
|                                                   | Long-term debt receivableintercompany          |           |             |              |      |                       |             |                            |             |              |      |                    |           
|                                                   | Net income distributions to Petróleos Mexicanos |           |             | (27,916,322  | )    |                       |             |                            |             | 17,499,351   |      |                    | 10,416,971
|                                                   | Other changes in equity and retained earnings   |           |             | 7,649,402    |      |                       |             |                            |             | 10,615,528   |      |                    | 9,149,140 
|                                                   |                                                 |           |             |              |      |                       |             |                            |             |              |      |                    |           
|Funds provided by (used in) financing activities   |                                                 |           | (10,763,273 | )            |      | 77,897,490            |             |                            | 52,846,773  |              |      | 11,719,035         |           
|                                                   |                                                 |           |             |              |      |                       |             |                            |             |              |      |                    |           
|Investing activities:                              |                                                 |           |             |              |      |                       |             |                            |             |              |      |                    |           
|                                                   | Increase in fixed assets, net                   |           |             | 6,064,180    |      |                       | (61,384,952 | )                          |             | (24,563,120  | )    |                    | (1,146,427
|                                                   | Investments in subsidiaries                     |           |             | (16,954,909  | )    |                       |             |                            |             |              |      |                    | (604,354  
|                                                   |                                                 |           |             |              |      |                       |             |                            |             |              |      |                    |           
|Funds provided by (used in) investing activities   |                                                 |           | (10,890,729 | )            |      | (61,384,952           | )           |                            | (24,563,120 | )            |      | (1,750,781         | )         
|                                                   |                                                 |           |             |              |      |                       |             |                            |             |              |      |                    |           
|(Decrease) increase in cash and cash equivalents   |                                                 |           | 16,763,240  |              |      | 10,355,793            |             |                            | 123,280     |              |      | 2,192,269          |           
|Cash and cash equivalents at beginning of the year |                                                 |           | 5,522,511   |              |      | 5,288,454             |             |                            | 722,477     |              |      | 2,908,422          |           
|                                                   |                                                 |           |             |              |      |                       |             |                            |             |              |      |                    |           
|Cash and cash equivalents at the end of the year   |                                                 | Ps.       | 22,285,751  |              | Ps.  | 15,644,247            |             | Ps.                        | 845,757     |              | Ps.  | 5,100,691          |           
|                                                   |                                                 |           |             |              |      |                       |             |                            |             |              |      |                    |           

F-101

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For The Years Ended December 31, 2002, 2001 and 2000

(In thousands of pesos and thousands of U.S. dollars)

SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
STATEMENT OF CHANGES IN FINANCIAL POSITION
For the year ended December 31, 2001

|                                                   |                                                 | Corporate |              | Master Trust |     | Subsidiary
Guarantors |              | Non-Guarantor
Subsidiaries |             | Eliminations |      | PEMEX
Consolidated |           
|-------------------------------------------------- | ----------------------------------------------- | --------- | ------------ | ------------ | --- | --------------------- | ------------ | -------------------------- | ----------- | ------------ | ---- | ------------------ | ----------
|Funds (used in) provided by operating activities   |                                                 | Ps.       | 93,512,424   |              | Ps. | 124,020,493           |              | Ps.                        | 9,070,449   |              | (Ps. | 9,302,161          | )         
|                                                   |                                                 |           |              |              |     |                       |              |                            |             |              |      |                    |           
|Financing activities:                              |                                                 |           |              |              |     |                       |              |                            |             |              |      |                    |           
|                                                   | Sale of future accounts receivable              |           |              |              |     |                       |              |                            |             | (3,053,256   | )    |                    |           
|                                                   | Long-term debt                                  |           |              | (79,144,359  | )   |                       | (19,050,139  | )                          |             | (2,925,553   | )    |                    | 3,541,089 
|                                                   | Long-term debt receivableintercompany          |           |              |              |     |                       |              |                            |             |              |      |                    |           
|                                                   | Net income distributions to Petróleos Mexicanos |           |              | (27,461,110  | )   |                       |              |                            |             | 18,837,927   |      |                    | 8,623,183 
|                                                   | Other changes in equity and retained earnings   |           |              | (5,563,799   | )   |                       |              |                            |             | 15,127,018   |      |                    | (3,306,297
|                                                   |                                                 |           |              |              |     |                       |              |                            |             |              |      |                    |           
|Funds provided by (used in) financing activities   |                                                 |           | (112,169,268 | )            |     | (19,050,139           | )            |                            | 27,986,136  |              |      | 8,857,975          |           
|                                                   |                                                 |           |              |              |     |                       |              |                            |             |              |      |                    |           
|Investing activities:                              |                                                 |           |              |              |     |                       |              |                            |             |              |      |                    |           
|                                                   | Increase in fixed assets, net                   |           |              | 9,751,146    |     |                       | (107,739,864 | )                          |             | (37,786,710  | )    |                    | (535,463  
|                                                   | Investments in subsidiaries                     |           |              |              |     |                       |              |                            |             |              |      |                    |           
|                                                   |                                                 |           |              |              |     |                       |              |                            |             |              |      |                    |           
|Funds provided by (used in) investing activities   |                                                 |           | 9,751,146    |              |     | (107,739,864          | )            |                            | (37,786,710 | )            |      | (535,463           | )         
|                                                   |                                                 |           |              |              |     |                       |              |                            |             |              |      |                    |           
|(Decrease) increase in cash and cash equivalents   |                                                 |           | (8,905,698   | )            |     | (2,769,510            | )            |                            | (730,125    | )            |      | (979,649           | )         
|Cash and cash equivalents at beginning of the year |                                                 |           | 14,428,209   |              |     | 8,057,964             |              |                            | 1,452,602   |              |      | 3,888,071          |           
|                                                   |                                                 |           |              |              |     |                       |              |                            |             |              |      |                    |           
|Cash and cash equivalents at the end of the year   |                                                 | Ps.       | 5,522,511    |              | Ps. | 5,288,454             |              | Ps.                        | 722,477     |              | Ps.  | 2,908,422          |           
|                                                   |                                                 |           |              |              |     |                       |              |                            |             |              |      |                    |           

F-102

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For The Years Ended December 31, 2002, 2001 and 2000

(In thousands of pesos and thousands of U.S. dollars)

SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
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-103

---



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED  DECEMBER 31, 2002, 2001 AND 2000    (Amounts expressed in thousands of pesos and thousands of U.S. dollars)

The significant differences between Mexican and U.S. GAAP as they affect PEMEX are described in Note 19. 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, Pemex-Exploration and Production, Pemex-
Petrochemicals, Pemex-Gas and Basic Petrochemicals, Pemex-Refining and the Master Trust. All other U.S. GAAP adjustments relate collectively to Petróleos Mexicanos and the
Subsidiary Entities.

22.    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" ("SFAS No. 69"). 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, |             
|----------------------------------------- | --------------------- | ------------------ | ------------
|
|Proved properties                         |                       | Ps.                | 204,210,112 
|Construction in progress                  |                       |                    | 108,789,994 
|Accumulated depreciation and amortization |                       |                    | (104,521,173
|                                          |                       |                    |             
|                                          | Net capitalized costs |                    | Ps.         
|                                          |                       |                    |             

F-104

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED  DECEMBER 31, 2002, 2001 AND 2000    (Amounts expressed in thousands of pesos and thousands of U.S. dollars)

Costs incurred for oil and gas property exploration and development activities:

|            |                      | Year ended December 31,
|----------- | -------------------- | -----------------------
|
|Exploration |                      | Ps.                    
|Development |                      |                        
|            |                      |                        
|            | Total costs incurred |                        
|            |                      |                        

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. 1,210,609, Ps. 1,043,572 and Ps. 1,710,998 for 2002, 2001 and 2000,
respectively, that are expensed, under successful efforts, as geological and geophysical exploration expenses. Development costs also include Ps. 21,358,068, Ps. 11,707,007 and Ps. 7,210,908 for 2002,
2001 and 2000 related to construction in progress. Upon project completion, construction in progress amounts will be re-classified either to expenses or capitalized as appropriate.

Results of operations for oil and gas producing activities:

|                                                           |  | Year Ended December 31,
|---------------------------------------------------------- |  | -----------------------
|
|Revenues from affiliates                                   |  | Ps.                    
|                                                           |  |                        
|Hydrocarbon duties                                         |  |                        
|Excess-gains taxes                                         |  |                        
|Production costs (excluding taxes)                         |  |                        
|Exploration expenses                                       |  |                        
|Depreciation, depletion and amortization                   |  |                        
|                                                           |  |                        
|                                                           |  |                        
|                                                           |  |                        
|Results of operations for oil and gas producing activities |  | Ps.                    
|                                                           |  |                        

F-105

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED  DECEMBER 31, 2002, 2001 AND 2000    (Amounts expressed in thousands of pesos and thousands of U.S. dollars)

Crude oil and natural gas reserves:

Sales prices and production costs (unaudited)

The following table summarizes average sales prices (excluding production taxes) in U.S. dollars:

|                                     |  | 2002 |       | 2001 |   | 2000 
|------------------------------------ |  | ---- | ----- | ---- | - | -----
|December average sales price         |  | $    | 24.53 |      | $ | 13.62
|Crude oil, per barrel                |  | $    | 26.36 |      | $ | 15.21
|Natural gas, per thousand cubic feet |  | $    | 3.58  |      | $ | 1.85 

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, not own, these reserves and sells the production 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 the
estimate is made. Mexico's proved reserves are estimated by PEMEX?s petroleum engineers.

PEMEX
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 experience in the area, the stage of development, quality and completeness of basic data and production and pressure history. 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, 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-106

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED  DECEMBER 31, 2002, 2001 AND 2000    (Amounts expressed in thousands of pesos and thousands of U.S. dollars)

The following two tables of oil and gas reserves set forth PEMEX's estimates of Mexico's proved reserves at December 31, 2002, 2001 and 2000 in accordance
with the definition of proved reserves under Rule 4-10(a) Regulation S-X of the Securities Act of 1933.

Crude oil and condensate reserves (including natural gas liquids)a (unaudited)

|                                          |                | (Millions of barrels)       |       
|----------------------------------------- | -------------- | --------------------------- | ------
|
|Proved developed and undeveloped reserves |                |                             |       
|                                          | At January 1   |                             | 18,767
|                                          |                | Revisions                   |       
|                                          |                | Extensions and discoveriesb |       
|                                          |                | Production                  |       
|                                          |                |                             |       
|                                          | At December 31 |                             | 17,196
|                                          |                |                             |       
|Proved developed reserves at December 31  |                | 11,725                      |       
|                                          |                |                             |       

F-107

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED  DECEMBER 31, 2002, 2001 AND 2000    (Amounts expressed in thousands of pesos and thousands of U.S. dollars)

Dry gas reserves (unaudited)

|                                          |                | (Billions of cubic feet)    |       
|----------------------------------------- | -------------- | --------------------------- | ------
|
|Proved developed and undeveloped reserves |                |                             |       
|                                          | At January 1   |                             | 16,256
|                                          |                | Revisions                   |       
|                                          |                | Extensions and discoveriesa |       
|                                          |                | Production                  |       
|                                          |                |                             |       
|                                          | At December 31 |                             | 14,985
|                                          |                |                             |       
|Proved developed reserves at December 31  |                | 8,572                       |       
|                                          |                |                             |       

Based
on the reservoir performance, new information, and discoveries, proved reserves in accordance with the definition of proved reserves under Rule 4-10(a) of
Regulation S-X for all regions as of December 31, 2002 are estimated to be 20,077 million barrels of oil equivalent (21,893 million barrels of oil equivalent at
December 31, 2001).

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 reserve revisions in the Marine, Southern and Northern Regions,
and (ii) excluding 2.5 billion barrels of proved reserves scheduled to be produced after the year 2027, as well as, in a lesser way, proved reserves from newly discovered fields.

Estimated
future cash inflows from production are computed by applying average prices of oil and gas on December 31 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
2002to the future pre-tax net cash flows related to Mexico's proved oil and gas reserves.

F-108

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED  DECEMBER 31, 2002, 2001 AND 2000    (Amounts expressed in thousands of pesos and thousands of U.S. dollars)

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 Petróleos Mexicanos and Subsidiary Entities 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, Petróleos Mexicanos and Subsidiary Entities must pay to the Mexican Government an excess gains tax, which for 2002 was
equal to 39.2% on the portion of
Petróleos Mexicanos and Subsidiary Entities' crude oil export sales revenues in excess of a threshold price of 15.50 U.S. dollars per barrel. Since the 2002 prices were higher than
15.50 U.S. dollars per barrel, Petróleos Mexicanos and Subsidiary Entities paid excess gains tax. For 2003, the excess gains tax applies to prices in excess of 18.35 U.S. dollars per
barrel. Petróleos Mexicanos and Subsidiary Entities are 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.

F-109

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED  DECEMBER 31, 2002, 2001 AND 2000    (Amounts expressed in thousands of pesos and thousands of U.S. dollars)

Standardized measure of discounted net cash flows

|                                                         |  | As of December 31 | 
|-------------------------------------------------------- |  | ----------------- | 
|
|Future cash inflows                                      |  | U.S.              | 
|Future production costs (excluding taxes)                |  |                   | 
|Future development costs                                 |  |                   | 
|                                                         |  |                   | 
|Future cash flows before tax                             |  |                   | 
|Future production-and-excess-gains taxes                 |  |                   | 
|Future income taxes                                      |  |                   | 
|                                                         |  |                   | 
|Future net cash flows                                    |  |                   | 
|Effect of discounting net cash flows at 10%              |  |                   | 
|                                                         |  |                   | 
|Standardized measure of discounted future net cash flows |  | U.S.              | 
|                                                         |  |                   | 

Note:    Table amounts may not total due to rounding.

F-110

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED  DECEMBER 31, 2002, 2001 AND 2000    (Amounts expressed in thousands of pesos and thousands of U.S. dollars)

To comply with SFAS No. 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

|                                                               |                   | 2002   |  | 2001 |             | 2000       |           
|-------------------------------------------------------------- | ----------------- | ------ |  | ---- | ----------- | ---------- | ----------
|Sales of oil and gas produced, net of production costs         |                   | (U.S.  |  | $    | 26,097,000  | )          | (U.S.     
|Net changes in prices and production costs                     |                   |        |  |      | 112,329,000 |            |           
|Extensions and discoveries                                     |                   |        |  |      | 1,528,000   |            |           
|Development cost incurred during the year                      |                   |        |  |      | 6,355,000   |            |           
|Changes in estimated development costs                         |                   |        |  |      | (4,613,000  | )          |           
|Reserves revisions, extensions, discoveries and timing changes |                   |        |  |      | 519,000     |            |           
|Accretion of discount of pre-tax net cash flows                |                   |        |  |      | 8,592,000   |            |           
|Net changes in production-and excess-gains taxes               |                   |        |  |      | (80,470,000 | )          |           
|Other                                                          |                   |        |  |      |             |            |           
|                                                               |                   |        |  |      |             |            |           
|Aggregate change in standardized measure                       |                   | U.S.   |  | $    | 18,143,000  |            | (U.S.     
|                                                               |                   |        |  |      |             |            |           
|Standardized measure                                           |                   |        |  |      |             |            |           
|                                                               | As of January 1   |        |  |      |             | 20,384,000 |           
|                                                               | As of December 31 |        |  |      |             | 38,527,000 |           
|                                                               |                   |        |  |      |             |            |           
|                                                               |                   | Change |  | U.S. |             | $          | 18,143,000
|                                                               |                   |        |  |      |             |            |           

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-111

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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, 2002, 2001 and 2000

General

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. For the years ended December 31, 2002, 2001 and
2000, 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, 2002 and 2001, and
for the three years then ended.

F-112

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

UNAUDITED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2002 AND 2001

(in thousands of constant pesos as of December 31, 2002)

|             |                                                                                               | 2002                                      |                              | 2001       
|------------ | --------------------------------------------------------------------------------------------- | ----------------------------------------- | ---------------------------- | -----------
|ASSETS       |                                                                                               |                                           |                              |            
|             | Current assets:                                                                               |                                           |                              |            
|             |                                                                                               | Cash and cash equivalents                 |                              | Ps.        
|             |                                                                                               | Accounts, notes receivable and other, net |                              |            
|             |                                                                                               | Inventories, net                          |                              |            
|             |                                                                                               |                                           |                              |            
|             |                                                                                               |                                           | Total current assets         |            
|             | Properties, net                                                                               |                                           |                              | 506,190,883
|             | Intangible asset derived from the actuarial computation of labor obligations and other assets |                                           |                              | 92,883,058 
|             |                                                                                               |                                           |                              |            
|             |                                                                                               |                                           | Total assets                 |            
|             |                                                                                               |                                           |                              |            
|LIABILITIES  |                                                                                               |                                           |                              |            
|             | Current liabilities:                                                                          |                                           |                              |            
|             |                                                                                               | Current portion of long-tem debt          |                              | Ps.        
|             |                                                                                               | Other current liabilities                 |                              |            
|             |                                                                                               |                                           |                              |            
|             |                                                                                               |                                           | Total current liabilities    |            
|             | Long-term debt                                                                                |                                           |                              | 231,790,948
|             | Reserve for retirement payments, pensions and indemnities, sundry creditors, and others       |                                           |                              | 295,606,903
|             |                                                                                               |                                           |                              |            
|             |                                                                                               |                                           | Total liabilities            |            
|             |                                                                                               |                                           |                              |            
|             | Minority interest                                                                             |                                           |                              | 2,996,624  
|TOTAL EQUITY |                                                                                               |                                           | 67,275,005                   |            
|             |                                                                                               |                                           |                              |            
|             |                                                                                               |                                           | Total liabilities and equity |            
|             |                                                                                               |                                           |                              |            

The accompanying notes are an integral part of this unaudited supplemental consolidated financial information.

F-113

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PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

(In thousands of constant pesos as of December 31, 2002)

|                                                                    |                                          | 2002 |             | 2001        |      | 2000        |            
|------------------------------------------------------------------- | ---------------------------------------- | ---- | ----------- | ----------- | ---- | ----------- | -----------
|Net sales(1)                                                        |                                          | Ps.  | 376,756,698 |             | Ps.  | 377,578,681 |            
|Other revenues                                                      |                                          |      | 7,766,200   |             |      | 16,077,620  |            
|                                                                    |                                          |      |             |             |      |             |            
|Total revenues                                                      |                                          |      | 384,522,898 |             |      | 393,656,301 |            
|                                                                    |                                          |      |             |             |      |             |            
|Cost and operating expenses:                                        |                                          |      |             |             |      |             |            
|                                                                    | Cost of sales                            |      |             | 168,500,591 |      |             | 182,540,133
|                                                                    | Transportation and distribution expenses |      |             | 16,169,274  |      |             | 15,416,084 
|                                                                    | Administrative expenses                  |      |             | 34,914,366  |      |             | 32,032,200 
|                                                                    | Financial integral cost (income), net    |      |             | 6,125,116   |      |             | (3,465,611 
|                                                                    | Other expenses                           |      |             | 5,727,953   |      |             | 7,171,225  
|                                                                    |                                          |      |             |             |      |             |            
|                                                                    | Total costs and operating expenses       |      |             | 231,437,300 |      |             | 233,694,031
|Income before hydrocarbon extraction duties and other               |                                          |      | 153,085,598 |             |      | 159,962,270 |            
|Hydrocarbon extraction duties and other                             |                                          |      | 183,887,625 |             |      | 181,453,984 |            
|Cumulative effect of adoption of new financial instruments standard |                                          |      |             |             |      | 4,007,402   |            
|Minority interest                                                   |                                          |      | (1,251,606  | )           |      | (749,704    | )          
|                                                                    |                                          |      |             |             |      |             |            
|Net loss                                                            |                                          | (Ps. | 32,053,633  | )           | (Ps. | 18,234,016  | )          
|                                                                    |                                          |      |             |             |      |             |            

---

The accompanying notes are an integral part of this unaudited supplemental consolidated financial information.

F-114

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PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(In thousands of constant pesos as of December 31, 2002)

|                                                                                      |                                                             | 2002 |            | 2001        |     | 2000       |            
|------------------------------------------------------------------------------------- | ----------------------------------------------------------- | ---- | ---------- | ----------- | --- | ---------- | -----------
|Operating Activities                                                                  |                                                             |      |            |             |     |            |            
|Net loss                                                                              |                                                             | (Ps. | 32,053,633 | )           | (Ps | 18,234,016 | )          
|Adjustments to reconcile net loss to cash (used in) provided by operating activities: |                                                             |      |            |             |     |            |            
|                                                                                      | Depreciation and amortization                               |      |            | 35,374,850  |     |            | 33,316,212 
|                                                                                      | Reserve for retirement payments, pensions and indemnization |      |            | 45,696,521  |     |            | 43,328,126 
|                                                                                      | Impairment of fixed assets                                  |      |            | (2,068,790  | )   |            | (7,056,019 
|                                                                                      | Loss on disposal of fixed assets                            |      |            | 13,486,107  |     |            | 9,200,401  
|                                                                                      | Allowance for uncollectible trade accounts                  |      |            | 671,009     |     |            | 54,870     
|                                                                                      | Allowance for slow-moving inventory and obsolescence        |      |            | 82,312      |     |            | (300,324   
|                                                                                      | Minority interest                                           |      |            | 1,535,287   |     |            | 658,098    
|                                                                                      | Foreign exchange loss (gain)                                |      |            | 5,385,043   |     |            | (9,059,525 
|                                                                                      | Accounting for financial instruments                        |      |            | 2,925,698   |     |            | (8,201,664 
|                                                                                      | Gain from monetary position                                 |      |            | (18,634,836 | )   |            | (12,522,753
|Changes in operating assets and liabilities:                                          |                                                             |      |            |             |     |            |            
|                                                                                      | Accounts and notes receivable                               |      |            | (11,637,942 | )   |            | 7,837,874  
|                                                                                      | Inventories                                                 |      |            | (6,298,983  | )   |            | 8,426,507  
|                                                                                      | Other assets                                                |      |            | (192,856    | )   |            | (2,881,929 
|                                                                                      | Accounts payable and accrued liabilities                    |      |            | 31,296,139  |     |            | (30,984,194
|                                                                                      | Sales of future accounts receivable                         |      |            |             |     |            | 793,577    
|                                                                                      |                                                             |      |            |             |     |            |            
|Cash flows provided by operating activities                                           |                                                             | Ps.  | 65,565,926 |             | Ps. | 14,375,241 |            
|                                                                                      |                                                             |      |            |             |     |            |            

The accompanying notes are an integral part of this unaudited supplemental consolidated financial information.

F-115

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PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS
ENDED DECEMBER 31, 2002, 2001 AND 2000

(In thousands of constant pesos as of December 31, 2002)

|                                                  |                                          | 2002 |             | 2001        |     | 2000        |            
|------------------------------------------------- | ---------------------------------------- | ---- | ----------- | ----------- | --- | ----------- | -----------
|Investing Activities                              |                                          |      |             |             |     |             |            
|                                                  | Loans granted to Pemex Finance           |      | Ps.         |             |     | Ps.         |            
|                                                  | Acquisition of fixed assets              |      |             | (86,901,057 | )   |             | (50,239,722
|                                                  |                                          |      |             |             |     |             |            
|Cash flows used in investing activities           |                                          |      | (86,901,057 | )           |     | (50,239,722 | )          
|                                                  |                                          |      |             |             |     |             |            
|Financing Activities                              |                                          |      |             |             |     |             |            
|                                                  | New long term financing                  |      |             | 132,831,404 |     |             | 133,209,628
|                                                  | Financing payments                       |      |             | (49,006,992 | )   |             | (96,989,823
|                                                  | Effect of consolidating Pemex Finance    |      |             |             |     |             | 898,063    
|                                                  | Dividends paid to the Mexican Government |      |             | (9,967,037  | )   |             | (2,428,688 
|                                                  |                                          |      |             |             |     |             |            
|Cash flows provided by financing activities       |                                          |      | 73,857,375  |             |     | 34,689,180  |            
|                                                  |                                          |      |             |             |     |             |            
|Effects of inflation on cash and cash equivalents |                                          |      | (23,178,965 | )           |     | (14,218,715 | )          
|Increase (decrease) in cash and equivalents       |                                          |      | 29,343,279  |             |     | (15,394,016 | )          
|Cash and cash equivalents, beginning of period    |                                          |      | 15,314,391  |             |     | 30,708,407  |            
|                                                  |                                          |      |             |             |     |             |            
|Cash and cash equivalents, end of period          |                                          | Ps.  | 44,657,670  |             | Ps. | 15,314,391  |            
|                                                  |                                          |      |             |             |     |             |            

The accompanying notes are an integral part of this unaudited supplemental consolidated financial information.

F-116

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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, 2002, 2001 and 2000

(In thousands of constant pesos as of December 31, 2002)

1.     Effects of inflation on the financial information

The following is the methodology utilized in preparing the price-level adjusted financial information.

The
consolidated supplemental financial information of PEMEX has been restated to recognize the effects of inflation and is expressed in thousands of pesos of constant purchasing power
as of December 31, 2002, determined as follows:



Year

Change in National Consumer Price Index2002

5.7008%2001

4.4035%2000

8.9593%


F-117

---

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, 2002, 2001 and 2000

(In thousands of constant pesos as of December 31, 2002)



Inventory and fixed assets are restated to replacement cost as set forth in Note 2 to the financial statements. Fixed assets were evaluated for impairment
on this basis. Cost of sales is determined based on the replacement costs calculated from when inventories were sold. Depreciation is based upon the restated carrying value of the respective assets.



Equity represents the combined historical movements in the amounts of the Certificates of Contribution "A", dividends and accumulated earnings, restated from
their date of origin to December 31, 2002 using the change in the NCPI during such period.

Accumulated
deficit from holding non-monetary assets represents the excess or deficit resulting from restating non-monetary assets via the methods described in
Note 2 to the financial statements and the NCPI.



Monetary position gain represents the inflationary effect, as measured by the NCPI, on net balance of monetary assets and liabilities as expressed in constant
pesos. The monetary gain related to the pension and other post retirement obligations that is attributable to the excess of the actual rate of inflation over the assumed rate of inflation included in
the actuarial calculations has been deferred as part of the actuarial gain or loss.

Foreign
exchange gains or losses are recognized as incurred.



The
price level adjusted cash flow has been prepared reflecting the impact of the U.S. GAAP adjustments. In accordance with the recommendation of the AICPA SEC Regulations Committee
International Practices Task Force the effects of inflation on cash flows are presented separately.

For
the purposes of the cash flow, PEMEX considers all highly liquid temporary investments with original maturities of three months or less, to be cash equivalents.

F-118

---



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, 2002, 2001 and 2000        (In thousands of constant pesos as of December 31, 2002)

Supplemental
disclosures of interest and taxes paid are as follows:

2002

2001

2000Interest paid (net of amounts capitalized)

Ps.
22,233,264

Ps.
19,752,858

Ps.
22,019,436Taxes paid


268,255,231


305,132,862


318,346,570


Supplemental
disclosures of non-cash transactions are as follows:

2002

2001

2000Acquisition of fixed assets via contractor financing

Ps.
14,316,317

Ps.


Ps.
17,825,442Unrealized gains (losses) on available for sale securities


183,446


(1,311,388
)

(8,210,516
)Additional minimum pension liability


9,296,132


7,681,553


13,416,924Accounting for financial instruments


(2,925,699
)

8,039,034


2.     Segment information

The following segment information is prepared on a price level adjusted basis.

|Year ended December 31: |              | Exploration and
Production |             | Refining(1) |     | Gas and Basic
Petrochemicals |             | Petrochemicals |             | Corporate and
other |     | Intersegment
Eliminations |            | Total
|----------------------- | ------------ | -------------------------- | ----------- | ----------- | --- | ---------------------------- | ----------- | -------------- | ----------- | ------------------- | --- | ------------------------- | ---------- | -----
|2002                    |              |                            |             |             |     |                              |             |                |             |                     |     |                           |            |      
|Sales:                  |              |                            |             |             |     |                              |             |                |             |                     |     |                           |            |      
|                        | Trade        |                            | Ps.         | 132,205,382 |     | Ps.                          | 263,124,768 |                | Ps.         | 64,105,174          |     | Ps.                       | 8,406,078  |      
|                        | Intersegment |                            |             | 156,994,480 |     |                              | 8,101,532   |                |             | 21,280,955          |     |                           | 3,073,312  |      
|                        |              |                            |             |             |     |                              |             |                |             |                     |     |                           |            |      
|Total net sales         |              | Ps.                        | 289,199,862 |             | Ps. | 271,226,300                  |             | Ps.            | 85,386,129  |                     | Ps. | 11,479,390                |            | Ps.  
|                        |              |                            |             |             |     |                              |             |                |             |                     |     |                           |            |      
|2001                    |              |                            |             |             |     |                              |             |                |             |                     |     |                           |            |      
|Sales:                  |              |                            |             |             |     |                              |             |                |             |                     |     |                           |            |      
|                        | Trade        |                            | Ps.         | 119,881,430 |     | Ps.                          | 257,983,755 |                | Ps.         | 70,400,410          |     | Ps.                       | 9,720,514  |      
|                        | Intersegment |                            |             | 165,897,708 |     |                              | 9,477,218   |                |             | 29,673,719          |     |                           | 3,013,726  |      
|                        |              |                            |             |             |     |                              |             |                |             |                     |     |                           |            |      
|Total net sales         |              | Ps.                        | 285,779,138 |             | Ps. | 267,460,973                  |             | Ps.            | 100,074,129 |                     | Ps. | 12,734,240                |            | Ps.  
|                        |              |                            |             |             |     |                              |             |                |             |                     |     |                           |            |      
|2000                    |              |                            |             |             |     |                              |             |                |             |                     |     |                           |            |      
|Sales:                  |              |                            |             |             |     |                              |             |                |             |                     |     |                           |            |      
|                        | Trade        |                            | Ps.         | 157,525,465 |     | Ps.                          | 263,898,350 |                | Ps.         | 73,360,752          |     | Ps.                       | 13,974,887 |      
|                        | Intersegment |                            |             | 200,586,757 |     |                              | 11,011,661  |                |             | 29,707,196          |     |                           | 3,116,657  |      
|                        |              |                            |             |             |     |                              |             |                |             |                     |     |                           |            |      
|Total net sales         |              | Ps.                        | 358,112,222 |             | Ps. | 274,910,011                  |             | Ps.            | 103,067,948 |                     | Ps. | 17,091,544                |            | Ps.  
|                        |              |                            |             |             |     |                              |             |                |             |                     |     |                           |            |      

---

F-119

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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, 2002, 2001 and 2000        (In thousands of constant pesos as of December 31, 2002)

3.     Financial integral result

Financial integral result prepared on a price level adjusted basis is analyzed as follows:

|                         |       | 2002 |             | 2001      |      | 2000        |          
|------------------------ | ----- | ---- | ----------- | --------- | ---- | ----------- | ---------
|Exchange gain (loss)     |       | Ps.  | 5,385,043   |           | (Ps. | 9,059,525   | )        
|Monetary position result |       |      | (18,634,836 | )         |      | (12,522,753 | )        
|Interest cost and other  |       |      | 19,374,909  |           |      | 18,116,667  |          
|                         |       |      |             |           |      |             |          
|                         | Total |      | Ps.         | 6,125,116 |      | (Ps.        | 3,465,611
|                         |       |      |             |           |      |             |          

F-120

---



APPENDIX        Reports of Other Independent Accountants

F/A-1

---

|PRICEWATERHOUSECOOPERS
|----------------------
|                      
|                      

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

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|PRICEWATERHOUSECOOPERS
|----------------------
|                      
|                      

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".

F/A-3

---

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

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PRICEWATERHOUSECOOPERS

| |  | PricewaterhouseCoopers LLP
1201 Louisiana, Suite 2900
Houston TX 77002-5678
Telephone (713) 356 4000
Facsimile (713) 356 4717
| |  | -----------------------------------------------------------------------------------------------------------------------------

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-5

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PRICEWATERHOUSECOOPERS

| |  | Assurance & Business Advisory
Services
P.O. Box 360
Julianaplein 38
WillemstadCuraçao
Netherlands Antilles
Telephone +599 (9) 430 0000
Facsimile +599 (9) 461 1118
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

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-6

---

PRICEWATERHOUSECOOPERS

| |  | PricewaterhouseCoopers N.V.
Accountants
Prins Bernhardplein 200
1097 JB Amsterdam
Postbus 94071
1090 GB Amsterdam
Telnr. (020) 568 66 66
Faxnr. (020) 568 68 88
www.pwcglobal.com/nl
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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-7

---

PRICEWATERHOUSECOOPERS

| |  | PricewaterhouseCoopers, S.C.
Mariano Escobedo 573
Col. Rincón del Bosque
11580 México, D.F.
Teléfono 5 263 6000
Fax          5 263 6010
| |  | ---------------------------------------------------------------------------------------------------------------------------------------

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".

F/A-8

---



PRICEWATERHOUSECOOPERS

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-9

---

|PRICEWATERHOUSECOOPERS |  |                                                                                                                                
|---------------------- |  | -------------------------------------------------------------------------------------------------------------------------------
|                       |  | PricewaterhouseCoopers, S.C.Mariano Escobedo 573
Col. Rincón del Bosque
11580 México, D.F.
Teléfono  5 263 6000
Fax  5 263 6010

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".

F/A-10

---

PRICEWATERHOUSECOOPERS

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-11

---

|PRICEWATERHOUSECOOPERS |  |                                                                                                                                                                                       
|---------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                      
|                       |  | PricewaterhouseCoopers N.V.
Accountants
Prins Bernhardplein 200
1097 JB Amsterdam
Postbus 94071
1090 GB Amsterdam
Telnr.  (020) 568 66 66
Faxnr.  (020) 568 68 88
www.pwcglobal.com/nl

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-12

---

|PRICEWATERHOUSECOOPERS |  |                                                                                                                                
|---------------------- |  | -------------------------------------------------------------------------------------------------------------------------------
|                      
|                       |  | PricewaterhouseCoopers LLP
1201 Louisiana, Suite 2900
Houston TX 77002-5678
Telephone  (713) 356 4000
Facsimile  (713) 356 4717

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-13

---

SIGNATURE

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

PETRÓLEOS MEXICANOSBy:
/s/JUAN JOSÉ SUÁREZ COPPELName:  Juan José Suárez Coppel
Title:    Chief Financial Officer


Date:  June
27, 2003

---

CERTIFICATIONS

I, Raúl Muñoz Leos, certify that:

|Date: June 27, 2003 |  | /s/ RAÚL MUÑOZ LEOSName: Raúl Muñoz Leos
Title: Director General/Chief Executive Officer
|------------------- |  | ----------------------------------------------------------------------------------------

---

CERTIFICATIONS

I, Juan José Suárez Coppel, certify that:

|Date: June 27, 2003 |  | /s/ JUAN JOSÉ SUÁREZ COPPELName: Juan José Suárez Coppel
Title: Chief Financial Officer
|------------------- |  | ---------------------------------------------------------------------------------------

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