As filed with the Securities and Exchange Commission on June 30, 2004



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 20-F

|(Mark One) |                                                                                                 
|---------- | ------------------------------------------------------------------------------------------------
|o          | Registration statement pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934
|ý          | Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934            
|           | For the fiscal year ended December 31, 2003                                                     
|o          | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934        
|           | For the transition period from            to                                                    

Commission
File No. 333-10920-01

Pemex Finance Ltd.(Exact Name of Registrant as Specified in Its Charter)

Cayman Islands(Jurisdiction of Incorporation or Organization)

BNP Paribas
Private Bank & Trust
Cayman Limited
P.O. Box 10632APO
4th Floor
Piccadilly Centre, Elgin Avenue
George Town, Grand Cayman
Cayman Islands
(345) 945-9208(Address of Principal Executive Offices)

Securities
registered or to be registered pursuant to Section 12(b) of the Act:None

Securities
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:

$225,000,000 9.14% Notes due 2004
$350,000,000 8.02% Notes due 2007
$200,000,000 8.450% Notes due 2007
$300,000,000 6.550% Notes due 2008
$600,000,000 9.69% Notes due 2009
$400,000,000 6.30% Notes due 2010
$200,000,000 8.875% Notes due 2010
$800,000,000 9.03% Notes due 2011

$250,000,000 7.33% Notes due 2012
$150,000,000 7.80% Notes due 2013
$200,000,000 10.61% Notes due 2017
$250,000,000 9.15% Notes due 2018
$100,000,000 Floating Rate Notes, Series A, due 2014
$90,000,000 Floating Rate Notes, Series B, due 2014
$35,000,000 Floating Rate Notes, Series C, due 2004


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.1,000 ordinary
shares.

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

Yes ý    No o

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

Item
17 o    Item 18 ý



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TABLE OF CONTENTS

|          |                                                                              |  | Page
|--------- | ---------------------------------------------------------------------------- |  | ----
|Item 1.   | Identity of Directors, Senior Management, and Advisers                       |  | 1   
|Item 2.   | Offer Statistics and Expected Timetable                                      |  | 1   
|Item 3.   | Key Information                                                              |  | 1   
|Item 4.   | Information on the Company                                                   |  | 13  
|Item 5.   | Operating and Financial Review and Prospects                                 |  | 77  
|Item 6.   | Directors, Senior Management and Employees                                   |  | 85  
|Item 7.   | Major Shareholders and Related Party Transactions                            |  | 86  
|Item 8.   | Financial Information                                                        |  | 86  
|Item 9.   | The Offer and Listing                                                        |  | 87  
|Item 10.  | Additional Information                                                       |  | 87  
|Item 11.  | Quantitative and Qualitative Disclosures About Market Risk                   |  | 92  
|Item 12.  | Description of Securities Other than Equity Securities                       |  | 92  
|Item 13.  | Defaults, Dividend Arrearages and Delinquencies                              |  | 92  
|Item 14.  | Material Modifications to the Rights of Security Holders and Use of Proceeds |  | 93  
|Item 15.  | Controls and Procedures                                                      |  | 93  
|Item 16.  | [Reserved]                                                                   |  | 93  
|Item 16A. | Audit Committee Financial Expert                                             |  | 93  
|Item 16B. | Code of Ethics                                                               |  | 93  
|Item 16C  | Principal Accountant Fees and Services                                       |  | 93  
|Item 16D. | Exemptions from the Listing Standards for Audit Committees                   |  | 94  
|Item 16E. | Purchases of Equity Securities by the Issuer and Affiliated Purchasers       |  | 94  
|Item 17.  | Financial Statements                                                         |  | 94  
|Item 18.  | Financial Statements                                                         |  | 95  
|Item 19.  | Exhibits                                                                     |  | 95  

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The annual report on Form 20-F of Petróleos Mexicanos for the year ended December 31, 2002, as filed with the United
States Securities and Exchange Commission (the "SEC") (Commission file No. 1-99) on June 27, 2003, is incorporated herein by reference, together with any amendments thereto.
The annual report on Form 20-F of Petróleos Mexicanos for the year ended December 31, 2003, to be filed with the SEC subsequent to the date of this annual
report, is incorporated herein by reference, together with any amendments thereto, effective as of the date of their respective filings.

CERTAIN DEFINED TERMS AND CONVENTIONS

Unless the context otherwise requires, the terms "Pemex Finance", "we", "us", "our" and the "issuer" refer to Pemex Finance Ltd.; the term "Mexico" refers
to the United Mexican States; and the term the "Mexican Government" refers to the three branches (executive, legislative and judicial) of the federal government of Mexico. The term "subsidiary
entities" refers to the subsidiary entities of Petróleos Mexicanos, which are Pemex-Exploración y Producción ("PEP"), Pemex-Refinación
("Pemex-Refining"), Pemex-Gas y Petroquímica Básica

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("Pemex-Gas
and Basic Petrochemicals") and Pemex-Petroquímica ("Pemex-Petrochemicals"). For convenience, when we wish to refer to Petróleos Mexicanos and its
subsidiary entities together, we use the term "PEMEX".

FACTORS AFFECTING FORWARD LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 provides for a safe harbor for forward-looking statements. This annual report of Pemex Finance on
Form 20-F contains words, such as "believe", "plan", "expect" and "anticipate" and similar expressions that constitute forward-looking statements, which reflect Pemex Finance's
views about future events and financial performance. Specifically, certain statements under the caption "Item 4. Information on the CompanyDescription of Business" relating to the
operation and performance of Pemex Finance, P.M.I. Comercio Internacional, S.A. de C.V., which we call "PMI", and PEP and under the
caption "Item 5. Operating and Financial Review and ProspectsManagement's Discussion and Analysis of Financial Condition and Results of Operations" are forward-looking statements.

These
forward-looking statements are subject to certain risks and uncertainties, including, but not limited to, changes in import controls or import duties, levies or taxes in
international markets, and changes in prices or demand for crude oil in international markets as a result of competitive actions or economic factors. These forward-looking statements are also subject
to the risks of performance by third parties in accordance with contractual terms and specifications. Although we believe that the expectations reflected by these forward-looking statements are
reasonable based on information currently available to us, we cannot assure that such expectations will prove to have been correct. 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.

The
annual report on Form 20-F of Petróleos Mexicanos for the fiscal year ended December 31, 2002, incorporated herein by reference, also
contains forward looking statements. For a discussion of the factors affecting the forward looking statements contained therein, see the last paragraph on page 2 thereof.

CURRENCY OF PRESENTATION

References in this annual report to "U.S. dollars", "U.S.$", "dollars" or "$" are to the lawful currency of the United States. References in this annual report to
"pesos" or "Ps." are to the lawful currency of Mexico which, effective January 1, 1993, replaced Mexico's former currency (also called the "peso") at the rate of one peso to one thousand old
pesos. During the transition period from January 1, 1993 through December 31, 1995, the new currency was officially referred to as thenuevo
peso(the new peso) and since January 1, 1996, has been officially referred to as the peso. All amounts set forth in this annual report in Mexican currency are stated in
pesos.

This
annual report contains translations of certain peso amounts into U.S. dollars at specified rates solely for the sake of convenience. These translations should not be construed as
representations that the peso amounts actually represent such U.S. dollar amounts or could be converted into U.S. dollars at the rate indicated. Unless otherwise indicated, such U.S. dollar amounts
have been translated from pesos at an exchange rate of Ps. 11.2360 to U.S.$1.00, which is the exchange rate that the Ministry of Finance and Public Credit gave PEMEX on December 31, 2003. On
June 25, 2004, the noon buying rate for cable transfers in New York reported by the Federal Reserve Bank of New York was Ps. 11.315.

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Item 1.    Identity of Directors, Senior Management, and Advisers.

Not applicable.

Item 2.    Offer Statistics and Expected Timetable.

Not applicable.

Item 3.    Key Information.

SELECTED FINANCIAL DATA

The selected financial data set forth below as of December 31, 2002 and 2003 and for each of the years ended December 31, 2001, 2002 and 2003 have
been derived from our audited financial statements included in Item 18. Selected financial data as of December 31, 1999, 2000 and 2001 and for each of the two years ended December 31,
1999 and 2000 have been derived from our previously published audited financial statements not included in this document. The financial statements have been audited by PricewaterhouseCoopers, S.C.,
independent registered public accounting firm. Our financial statements are prepared in accordance with the international accounting standards promulgated by the International Accounting Standards
Committee, otherwise referred to as "IAS". This summary financial data should be read together with, and are qualified in their entirety by reference to, the section entitled "Item 5. Operating and
Financial Review and Prospects" and "Item 18. Financial Statements".

|                      |                                     | Year ended December 31, |  
|--------------------- | ----------------------------------- | ----------------------- | -
|
|
|Income Statement Data |                                     |                         |  
|                      | Revenues                            |                         | $
|                      | Financing costs                     |                         |  
|                      | General and administrative expenses |                         |  
|                      |                                     |                         |  
|                      | Net income                          |                         | $
|                      |                                     |                         |  

|                   |                                                              | As of December 31,
|------------------ | ------------------------------------------------------------ | ------------------
|
|
|Balance Sheet Data |                                                              |                   
|                   | Cash and cash equivalents                                    |                   
|                   | Current purchased accounts receivable                        |                   
|                   | Rights to future (ungenerated) purchased accounts receivable |                   
|                   | Total assets                                                 |                   
|                   | Current liabilities                                          |                   
|                   | Long-term debt                                               |                   
|                   | Total liabilities                                            |                   
|                   | Capital stock                                                |                   
|                   | Total shareholders' equity                                   |                   
|                   | Total liabilities and shareholders' equity                   |                   

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RISK FACTORS

We are subject to various changing economic and social conditions, including in the petroleum industry, as described below. You should
consider carefully the following factors as well as the other information in this annual report.

Risks Related to Payments on the Notes

Our ability to make payments on the Notes depends on PEMEX's generation of sufficient eligible receivables.

Generally,
our business consists of using the proceeds of the debt we issue to purchase accounts receivable which have been generated or will be generated in the future through the sale
of crude oil to the 37 current designated customers of PMI. PMI purchases the crude oil that it sells to these designated customers from PEP, Petróleos Mexicanos' exploration and
production affiliate. We make payments on our indebtedness, including the notes we have issued under a senior indenture dated as of December 1, 1998 (which we call the "Notes"), from the money
that certain designated customers pay into a collection account on eligible accounts receivable for crude oil. We do not have a direct commercial relationship with these designated customers, and we
do not produce, transport or sell crude oil. Accordingly, because we do not generate the eligible receivables ourselves, our ability to make payments on the Notes depends on the generation of eligible
receivables by PMI, including both current eligible receivables and eligible receivables that will be generated in the future. We rely on Petróleos Mexicanos, operating through PMI and
PEP, to sell enough crude oil to the designated customers over time to generate sufficient eligible receivables. We have no control over Petróleos Mexicanos, PEP or PMI.

Petróleos
Mexicanos, PEP and PMI's ability to generate enough eligible receivables to allow us to make timely payments on the Notes depends on two factors:



1.The designated customers may reduce the amount of crude oil they purchase.    The
level of demand for PEMEX's crude oil is directly related to the designated customers' continuing need for and ability to purchase crude oil from PMI. However, a designated customer's demand for
PEMEX's crude oil could diminish for a variety of reasons, including:



Reduction
in designated customer demand could materially limit Petróleos Mexicanos, PEP and PMI's ability to generate eligible receivables.

Similarly,
PMI may materially change the terms under which it sells its crude oil to any designated customer. These changes may make it more difficult for that designated customer to
purchase crude oil from PMI. We purchase receivables that have already been generated by PMI, as well as future receivables that PMI will generate. To the extent that the time between the sale and
generation of future receivables increases, these risks will be borne for a longer period. See "Item 5. Operating and Financial Review and ProspectsManagement's Discussion and Analysis of
Financial Condition and Results of OperationsLiquidity and Capital Resources". We have no control over the designated customers or PMI in situations like these. See "Risks
Related to PEMEX, PEP and PMICrude oil prices are volatile, and low oil prices negatively affect PEMEX's income". For a discussion of PEMEX's customers, see "Item 4. Information on the
CompanyDescription of BusinessPEMEX's Customers and Receivables".

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2.PEP may not produce sufficient crude oil to permit the creation of enough eligible
receivables.    The ability to generate eligible receivables is also dependent on PEP's continued sale of crude oil through PMI. PEP has agreed not to export crude oil to
designated customers other than through PMI. However, PEP has no contractual obligation to continue to produce and sell crude oil generally. Further, in order to maintain sufficiently high production
levels, PEP may have to find additional oil reserves as the existing reserves become depleted. PEP may also need to invest in new production facilities as the existing facilities become obsolete. We
have no control over PEP and cannot guarantee that PEP will be able to find additional reserves or invest in new facilities. See "Risks Related to PEMEX, PEP and PMI".

If collections on purchased receivables are held in the retention account, cash flow available to PEP could be reduced, which could hurt PEP's ability
to produce oil and PMI's ability to generate eligible receivables.

In
some circumstances, such as when an event of default occurs, all or a portion of collections on purchased receivables paid into the collection account will be transferred to a
retention account. It is possible that the transfer of funds to the retention account could significantly reduce our purchases of eligible receivables, which would in turn reduce PEP's operating cash
flow. Any reduction in cash flow available to PEP to fund its operations on a day to day basis could adversely affect its ability to produce oil and, in turn, the level of receivables generated by
PMI.

For
an explanation of the circumstances in which collections will be paid into the retention account, see "Item 4. Information on the CompanyDescription of Principal
AgreementsThe Fiscal Agency AgreementEvents of Default" and "Funding and Administration of Retention Account".

If PMI fails to generate eligible receivables we have already purchased, we have no recourse to PMI or PMI Services.

Most
of the eligible receivables we have purchased and will purchase will be generated at some point in the future. We cannot guarantee that current market conditions will continue to
prevail. Since we have no recourse to PEP, PMI or P.M.I. Services B.V., which we call "PMI Services", except in limited circumstances, we alone bear the risk that PMI will not be able to
generate the future eligible receivables for which we have already paid.

If a designated customer fails to honor its payment obligations, we have no recourse to PMI or PMI Services.

Except
in limited circumstances, PMI and PMI Services have no obligation to refund any of our payments for eligible receivables. This includes payments we have made from the
approximately U.S.$4.7 billion of proceeds from our existing indebtedness. Without recourse to PMI, PMI Services or any other entity, we alone bear the risk of a designated customer failing to
honor its payment obligations with respect to any current and future eligible receivables purchased from PMI.

There
are only two limited situations in which we may rescind our purchase of eligible receivables and claim repayment of the purchase price from PMI. We may rescind our purchase if:



These
limited circumstances do not include the failure of a designated customer to fulfill its payment obligations. See "Item 4. Information on the CompanyDescription of
Principal AgreementsThe Receivables Purchase AgreementSubstitution and Repurchase of Receivables". Therefore, once PMI has generated a purchased receivable, PMI will have
satisfied its obligation to deliver that receivable, regardless of whether that customer ultimately pays.

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In order to make payments on the Notes, we rely on the designated customers to make timely payments on the purchased receivables into the collection
account.

If
one or more designated customers suffer significant negative changes in their business or financial condition that make it difficult or impossible for them to make payments on the
purchased receivables, it will impair our ability to make payments on the Notes. The magnitude of this negative effect will depend primarily on the amounts these designated customers owe with respect
to purchased receivables.

Neither
we nor PMI limits the percentage of sales of crude oil which is sold to particular customers. Similarly, neither we nor PMI places any limit on the amount of any receivables
payable by any designated customer's purchased receivables or the amount of purchased receivables of affiliates of PEMEX.

The
designated customers do not buy crude oil at set intervals. Accordingly, we cannot guarantee that any particular pattern of payments into the collection account will occur. The
non-payment by even one designated customer may have a substantial impact on the flow of collections into the collection account.

A court may not treat our purchase of eligible receivables as a sale or may contest our purchase, which may make it difficult for us to make payments on
the Notes if PMI or PMI Services becomes insolvent or bankrupt.

We
have been advised by our Mexican counsel, our Netherlands counsel, and our Cayman Islands counsel that transfers of eligible receivables under the receivables purchase agreement
should qualify as sales under the laws of those jurisdictions. However, no court precedent in those jurisdictions directly supports that advice. Therefore, we cannot assure you that a court in any of
these jurisdictions would view the transfer of eligible receivables from PMI to PMI Services, or from PMI Services to us, as sales. If the transfer is not treated as a sale, we may have difficulty
making payments on the Notes if PMI or PMI Services becomes insolvent or subject to bankruptcy or equivalent proceedings. In addition, in any such bankruptcy or equivalent proceeding, either PMI
Services or we may be stayed in taking action with respect to the receivables and required to have our interests in the receivables determined by a court, which would likely delay and could result in
reductions in payments on the Notes.

Furthermore,
our ability to make payments on the Notes could be limited if a court were to void a transfer by which we received eligible receivables. A court could void a transfer of
eligible receivables if the transfer were made:



If
the transfer were considered void, PMI Services or we could be treated as having an unsecured claim for the amount paid to purchase the receivables.

1.Treatment Under Mexican and Cayman Islands Law.    Instead of treating the
transfers of eligible receivables from PMI to PMI Services and from PMI Services to us as sales, courts applying Mexican or Cayman Islands law could treat these transfers in two other ways:



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Although
there are no court precedents supporting the foregoing treatment, if the transfer is treated in either of these ways, it is likely that there would be a delay and, possibly, a
reduction in payment on the Notes.

You
should also be aware that because PMI is a Mexican corporation, it is subject to Mexican bankruptcy law. Under Mexican bankruptcy law, the bankruptcy trustee may discontinue some
activities of a bankrupt company and refuse to perform some contractual obligations of that company upon court
approval. In particular, if PMI were declared bankrupt by a Mexican bankruptcy court, the bankruptcy trustee could discontinue sales of crude oil upon court approval. This discontinuation would
terminate the generation of future eligible receivables we had already purchased and thus substantially reduce our ability to make payments under the Notes.

The
bankruptcy trustee could also refuse to continue to sell additional eligible receivables to PMI Services under the receivables purchase agreement. PMI Services could file a
claim against the estate of PMI seeking a remedy for PMI's failure to generate future eligible receivables that we had already purchased. However, even if a court were to recognize PMI Services'
claim, it would qualify as an unsecured claim for the amount PMI Services paid to PMI, in which case the claim would rank equally in right of payment with all other unsecured obligations of PMI, and
would be subordinate to claims of creditors preferred under Mexican bankruptcy law. The amount recoverable under this claim, if any, would depend on the outcome of the bankruptcy proceedings.

2.Treatment Under Netherlands Law.    Legal doctrine in the Netherlands might, if PMI
Services were to enter bankruptcy proceedings under Netherlands law, limit our rights to eligible receivables that we purchased prior to the bankruptcy proceedings but that PMI generated after those
proceedings began. In this case, Netherlands law would grant us only the right to recover the purchase price we paid to PMI Services for the eligible receivables. This right to recover the relevant
purchase price would rank equally with all other unsecured indebtedness or other obligations of PMI Services. If PMI Services' assets were inadequate to cover all the claims, we could only recover our
pro rata share of the assets.

3.Treatment Under New York Law.    If PMI or PMI Services were to become the subject
of a bankruptcy proceeding and if the court were to apply New York law, the court might decide to recharacterize each transfer of eligible receivables as the provision of collateral to secure a loan.
The court would therefore consider us to be a creditor of PMI Services, and PMI Services to be a creditor of PMI. In our capacity as creditors, we and PMI Services might be treated as having a
security interest in the eligible receivables that we had already purchased.

We
cannot predict what effect, if any, this determination would have in a bankruptcy proceeding of PMI or PMI Services in Mexico, the Cayman Islands or The Netherlands because there is
no legal provision or precedent in those jurisdictions directly applicable to the sale transaction described in this annual report. Moreover, if a bankruptcy proceeding of PMI or PMI Services were
brought in the United States and the court were to recharacterize the transfer as described above, we can give no assurance that the court would find us to be entitled to assets sufficient to cover
payments on the Notes or that these payments could be made on a timely basis.

To
the extent that the time between the sale and generation of future receivables increases, the risks described in this risk factor will be borne for a longer period. See "Item 5.
Operating and Financial Review and ProspectsManagement's Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital Resources".

Risks Related to the Obligations of Pemex Finance, PMI Services, PMI and PEP

The trustee may not be aware of all relevant events possibly leading to an event of default.

We
cannot guarantee that the trustee representing holders' interest in the Notes will learn of events that may give rise to an event of default under the Notes. We have agreed to a
number of financial covenants under the fiscal agency agreement. We, PEP, PMI and PMI Services have agreed to other covenants under the fiscal agency agreement, the indenture and the receivables
purchase agreement. Failure to comply with those covenants, on our part or on the part of PEP, PMI or PMI Services, will give rise to an event of default under the Notes.

5

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However,
the servicer, the fiscal agent and the collection agent have no duty to monitor compliance with the covenants. Further, none of them has any duty to inform the trustee or anyone
else of a violation of the covenants. This means that the trustee may not be aware that an event of default has occurred or is about to occur, and therefore may not be able to make demands of us, PEP,
PMI and PMI Services that can be made in an event of default and that might be in the interest of holders of Notes. For a description of risks that arise after an event of default has occurred, see
the following risk factor.

If an event of default occurs, holders of Notes will have recourse only to us and we cannot guarantee that these holders will receive all of the money
to which they are entitled.

If
an event of default occurs, holders of Notes may not receive all of the money to which they are entitled under the Notes. An event of default may prompt the acceleration of the
maturity of the Notes of any series. If this occurs, subject to some exceptions, holders of Notes will receive an amount of the accelerated payments of principal and interest equal to their
proportionate share of the amounts on deposit in the retention account maintained by the fiscal agent. However, the amounts distributed from the retention account over time may not be sufficient to
pay all of the money to which holders of Notes are entitled. See "Item 4. Information on the CompanyDescription of Principal AgreementsThe Fiscal Agency
AgreementFunding and Administration of Retention Account".

The
Notes are solely our obligation. They are not obligations of, or guaranteed by, the Mexican Government, PEMEX, PEP, PMI, PMI Services, any other affiliate of PEMEX, any designated
customer or any other party. Moreover, in an event of default, holders of Notes will not have any recourse against any of our shareholders, directors or officers.

We have limited control over PMI in its capacity as servicer.

PMI has been named the servicer. We may remove PMI as servicer in some limited circumstances. However, beyond those circumstances, we have no control over the
manner in which PMI or any subsequently named servicer carries out its duties as servicer.

As
the servicer, PMI services, manages, administers and collects the eligible receivables that we have purchased. PMI has agreed not to resign as servicer so long as:



We
cannot ensure that any subsequently named servicer will be able to carry out its duties at the same level of efficiency as PMI. See "Item 4. Information on the
CompanyDescription of Principal AgreementsThe Servicing and Collection Agency AgreementDuties of the Servicer".

Because we are a foreign company, holders of the Notes may not be able to effect service of process on, or enforce a judgment against,
us.

We
are organized under the laws of the Cayman Islands, and all of our assets, directors and officers, as well as some of the experts named in this annual report, reside outside the
United States. As a result, you may not be able to effect service of process on us, our directors or officers or the experts within the United States. You also may not be able to enforce in the United
States judgments obtained in the United States against us or our directors or officers, if those judgments are not based on Cayman
Islands law. Accordingly, you may not be able to enforce in the United States any judgments based on the civil liability provisions of the federal securities laws of the United States.

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Our
Cayman Islands counsel has advised us that the courts of the Cayman Islands will recognize and enforce a foreign judgment without re-examining the merits of that judgment
so long as:



Nevertheless,
we do not know whether you would be able to enforce liabilities based on the federal securities laws of the United States in the Cayman Islands. We also do not know whether
Cayman Islands courts would enforce judgments of United States courts based on the civil liability provisions of the federal securities laws of the United States.

Risks Related to PEMEX, PEP and PMI

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 PEMEX, as well as its annual budget, which is
approved by the Mexican Congress. The Mexican Government has the power to intervene directly or indirectly in PEMEX's commercial affairs. Such an intervention could adversely affect PEMEX and thereby
adversely affect our ability to make payments under the Notes.

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 PEMEX or its assets. A privatization could
adversely affect PEMEX's production, cause a disruption in its workforce and its operations, and cause it to default on certain obligations. See also "Risks Related to Mexico" below.

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 PEMEX's 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.

Maya
crude oil is particularly vulnerable to fluctuations in international crude oil prices. Because Maya crude oil is a heavy sour crude oil with a smaller, more concentrated market, it
is more susceptible to drops in international crude oil demand. In addition, when prices of lighter crude oils decrease, Maya crude oil becomes less competitive because it costs more to refine it.
Historically, the weighted average price of Maya crude oil exported by PEMEX has fluctuated from U.S.$25.33 per barrel in 1984 to U.S.$14.08 in 1999. The weighted average price per barrel of Maya
crude oil exported by PEMEX during 2003 was U.S.$24.15.

When
international crude oil and natural gas prices are low, PEMEX earns less export sales revenue, and, therefore, earn less income because its costs remain roughly constant.
Conversely, when crude oil and natural gas prices are high, PEMEX earns more export sales revenue and its income increases. As a result, future fluctuations in international crude oil prices will
directly affect PEMEX's results of operations and financial condition.

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If
Maya crude oil prices decline for a substantial period below certain levels, PEMEX and PMI might be unable to cause the monthly average amount of eligible receivables of designated
customers generated by PMI to achieve the levels needed to maintain the debt service coverage ratio required under the fiscal agency agreement and, ultimately, to make our payments on the Notes.

Very
low crude oil prices, in particular, could negatively affect PEP's ability to maintain its levels of production and therefore the generation of receivables.

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. PEMEX does not control the Mexican
Government's international affairs and the Mexican Government could agree with OPEC or other countries to reduce PEMEX's crude oil production or exports in the future. A reduction in PEMEX's oil
production and/or exports could reduce PEMEX's revenues.

PEMEX does not own the hydrocarbon reserves in Mexico, and PEMEX's 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 PEMEX's ability to generate income.

The
information on oil, gas and other reserves set forth in the annual report on Form 20-F of Petróleos Mexicanos is based on 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 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. PEP revises its estimates of Mexico's hydrocarbon reserves annually, which may result in material revisions to PEMEX's estimates of Mexico's hydrocarbon reserves.

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

PEMEX
is 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).

More
specifically, PEMEX's 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
PEMEX has purchased insurance policies covering some of these risks, these policies may not cover all liabilities, and insurance may not be available for all risks.

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

The
Mexican Government taxes Petróleos Mexicanos and its subsidiary entities heavily. In 2003, approximately 64.6% of their sales revenues were used to pay taxes to the
Mexican Government. The Mexican Government and PEMEX determine the rates of taxes and duties applicable to PEMEX from year to year depending

8

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on
a variety of factors. In addition, Petróleos Mexicanos is obligated to pay minimum guaranteed dividends to the Mexican Government.

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.

PEMEX
invests funds to increase the amount of extractable hydrocarbon reserves in Mexico. PEMEX also continually invests capital to enhance its hydrocarbon recovery ratio and improve the
reliability and productivity of PEMEX's infrastructure. PEMEX's ability to make these capital expenditures is limited by the substantial taxes that it pays and cyclical decreases in its revenues
primarily related to lower oil prices. In addition, budget cuts imposed by the Mexican Government and the availability of financing may also limit its ability to make capital investments.

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 PEMEX's 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
PEMEX's costs because it requires PEMEX to make significant capital expenditures, limits its ability to extract hydrocarbons resulting in lower revenues, and forces PEMEX to raise the price of its
products relative to its competitors. At December 31, 2003, PEMEX estimated and accrued environmental liabilities totaled Ps. 1,926,440 million.

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

PEMEX
prepares its financial statements according to Mexican GAAP, which differs in certain significant respects from 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, capitalized interest, depreciation, impairment of fixed assets, profit in inventory and accounting for its investment in shares of Repsol YFP, S.A. In
addition, PEMEX generally only prepares U.S. GAAP information on a yearly basis. As a result, there may be less or different publicly available information about PEMEX than there is about U.S.
issuers.

Changes in Mexican taxes may occur which may allow us to redeem the Notes without paying a premium to holders of Notes.

PMI
obtained a ruling from the Mexican tax authorities confirming that with respect to the payments under the Notes PMI is not subject to withholding tax in Mexico.
PricewaterhouseCoopers, special Mexican tax counsel to Pemex Finance, has advised us that the Mexican Income Tax Law was amended, effective on January 1, 2002, and under the amended tax law PMI
might be subject to withholding tax at rate of 10%. However, PricewaterhouseCoopers advised us that PMI would not be subject to withholding tax because of this amendment to the Mexican Income Tax Law,
as long as the Treaty to Avoid Double Taxation between Mexico and The Netherlands is in force.

You
should be aware that, under the terms of the supplemental indentures under which the Notes were issued, we have the right to redeem the Notes in some circumstances without paying a
make whole premium to holders of the Notes to account for any losses they may suffer because of the early redemption. We can redeem the Notes without paying holders this premium if:



9

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Mexican
tax rules are approved on an annual basis. The Treaty to Avoid Double Taxation between Mexico and The Netherlands, on which the PricewaterhouseCoopers advice referred to above
relies, may be amended. Therefore, we cannot assure you that the applicable legal and treaty provisions will remain in effect. Additional taxes may apply to the transactions described in this annual
report. Accordingly, you should be aware that these transactions, including payments under the Notes, may be subject to Mexican taxes in the future.

Petróleos Mexicanos, PEP or PMI 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, PEP and PMI are decentralized public entities of the Mexican Government. Accordingly, you may not be able to obtain a judgment in a U.S. court against
them unless the U.S. court determines that they are not entitled to sovereign immunity with respect to that action. In addition, Mexican law does not allow attachment prior to judgment. As a result,
your ability to enforce judgments against Petróleos Mexicanos, PEP and PMI 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 Petróleos Mexicanos, PEP or
PMI, 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 their 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 the obligations of Petróleos
Mexicanos, PEP or PMI, including obligations under documents related to the receivables and the letter agreement between us and PEMEX, satisfaction of those obligations may be made in pesos.

The
directors and officers of PEMEX, as well as some of the experts named in this annual report, reside outside the United States. Substantially all of PEMEX's assets and those of most
of its directors, officers and experts are located outside the United States. As a result, you may not be able to effect service of process on its directors or officers or those experts within the
United States.

Risks Related to Mexico

Economic conditions and government policies in Mexico may have a material impact on our operations.

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

Changes in exchange rates or in Mexico's exchange control laws may hamper our ability to make payments on the Notes.

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 Petróleos Mexicanos, PEP or PMI from paying their foreign currency obligations. If
they do stop paying their foreign currency obligations, PMI may be unable to continue generating or servicing eligible receivables, which may in turn render us unable to make payments to holders of
the Notes.

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In
the future, we and PEMEX 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 PEMEX's and our interest costs in pesos and result in foreign exchange losses.

Risks Related to the Notes

The market for the Notes may not be liquid.

The Notes are primarily traded in the over-the-counter market. The Notes are not listed on any securities exchange other than the
Luxembourg Stock Exchange and are not quoted through an automated quotation system. We can make no assurance as to the liquidity of or trading markets for the Notes. We cannot guarantee that holders
of Notes will be able to sell their Notes in the future. We also cannot guarantee that any sale would be at a price equal to or greater than the principal amount or initial offering price of the
Notes. If the market for the Notes does not develop, holders of Notes may be unable to resell the Notes for an extended period of time, if at all. Consequently, holders of the Notes may not be able to
easily liquidate their investment, and the Notes may not be readily accepted as collateral for loans.

We may issue additional debt, which may affect the holders of Notes negatively.

From time to time, we may issue additional debt securities or incur other indebtedness. If we issue additional debt, our existing noteholders' proportional share
in the proceeds from the retention account if an event of default or specified event under the fiscal agency agreement occurs will be smaller. See "Item 4. Information on the
CompanyDescription of Principal AgreementsThe Fiscal Agency AgreementEvents of Default" and "Specified Events". Further, there may be more creditors
pursuing our assets if we default or become bankrupt. Thus, our assets would be divided among a greater number of creditors.

The rights of MBIA or Ambac may limit the rights of the holders.

MBIA Insurance Corporation ("MBIA") and Ambac Assurance Corporation ("Ambac") have rights under the documents governing our existing debt which may significantly
limit the rights of the holders of insured Notes to seek a remedy for any breach or to instruct the trustee to pursue a remedy. More specifically, under the note insurance policies, MBIA and Ambac are
the series controlling party for the series of insured Notes that they guarantee. This means that, unless it has defaulted on its obligations under its note insurance policy, MBIA or Ambac, as
applicable, has the right to:



Holders
do not have the same rights with respect to the insured Notes. See "Item 4. Information on the CompanyDescription of the IndentureControl by the Series
Controlling Party" and "Description of the Insurance DocumentsThe Note Insurance Policies".

As
long as MBIA or Ambac is the controlling party with respect to a series of insured Notes, no noteholders of that series will have any rights whatsoever to exercise remedies against
us, Petróleos Mexicanos, PMI, PMI Services or PEP. This includes remedies for a breach of any of the transaction documents. Also, holders of insured Notes will not have the right to
direct the trustee for their series of insured Notes to exercise any remedy on their behalf.

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MBIA
and Ambac will lose their status as the series controlling party for a series of insured Notes only if the relevant issuer has defaulted on a note insurance policy and the default
is continuing. For a description of what constitutes a note insurance policy default, see "Item 4. Information on the CompanyDescription of the Indenture".

Depending
on the relative outstanding principal amount of the insured Notes, holders of uninsured Notes may not be in a position collectively to direct the trustee with respect to
remedies, waivers and other matters under the transaction documents.

Both
MBIA and Ambac have the same rights with respect to the series which they insure of the Notes we issued on December 14, 1998, February 25, 1999, July 27, 1999
and February 10, 2000.

Actual Results of Our Operations May Differ From Those Contained in Forward-Looking Statements.

This
annual report contains forward-looking statements. These forward-looking statements reflect our views with respect to future events and financial performance. However, actual
results could differ materially from the results projected in the forward-looking statements as a result of the risks described above.

You
can identify these forward-looking statements by, among other things, the use of forward-looking language, such as "believe", "expect" and "anticipate" and similar expressions. These
statements are based on current plans, estimates and projections. Therefore you should not place undue reliance on them. Forward-looking statements speak only as of the date they are made, and we
undertake no obligation to update any of them publicly in light of new information or future events.

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Item 4.    Information on the Company.

DESCRIPTION OF BUSINESS

Pemex Finance Ltd. is a limited liability company incorporated under the laws of the Cayman Islands on November 18, 1998. We are tax exempt under
the laws of the Cayman Islands and we have a limited operating history.

We
are a special purpose financing vehicle formed as part of a program established to finance the capital expenditures of PEMEX. PEMEX is Mexico's state oil and gas company. It is the
largest company in Mexico and one of the largest oil and gas companies in the world. During 2003, PEP, through PMI, Petróleos Mexicanos' marketing affiliate, exported an average of
1,844 tbpd of crude oil. Of this amount, 85.2%, or 1,366 tbpd, consisted of exports to designated customers of PMI of crude oil designated as "Maya" crude oil as described below in "The
Designated Customers and Eligible ReceivablesCrude Oil".

Our
authorized share capital consists of 1,000 ordinary shares, U.S.$1.00 par value per share, all of which have been issued and paid. All of our outstanding shares are owned by BNP
Private Bank & Trust Cayman Limited as trustee for the Pemex Finance Trust, pursuant to the terms of a charitable trust created by a declaration of trust dated December 1, 1998 under the
laws of the Cayman Islands.

Our
registered office is at BNP Paribas Private Bank & Trust Cayman Limited, P.O. Box 10632APO, 4th Floor, Piccadilly Centre, Elgin Avenue, George Town, Grand
Cayman, Cayman Islands, telephone number 345-945-9208. Curtis, Mallet-Prevost, Colt and Mosle in New York and its successors, at 101 Park Avenue, New York, NY
10178-0061, is our agent for service of process.

Business

Generally, our business consists of using the proceeds of the debt we issue to purchase accounts receivable which have been generated or will be generated in the
future through the sale of crude oil to the 37 current designated customers of PMI. PMI purchases the crude oil that it sells to these designated customers from PEP, Petróleos
Mexicanos' exploration and production affiliate. The sale of accounts receivable from PMI to us takes place in two steps. First, PMI sells the accounts receivable of designated customers to PMI
Services, an affiliate of Petróleos Mexicanos organized under the laws of The Netherlands. Second, PMI Services, in turn, sells those receivables to us. We buy both receivables which
have been generated by PMI and receivables which PMI will generate in the future.

As
of December 1, 1998, we entered into a contract called the receivables purchase agreement with the exploration and production and marketing arms of PEMEX. Under this contract,
we have the right to purchase, from time to time, accounts receivable that have been generated, or will be generated in the future, from the exports by PMI of crude oil to certain designated
customers. By acquiring such eligible receivables on an on-going basis under the receivables purchase agreement, we generate the cash flows required to service our debt, including the
Notes. Our business is limited to the purchase of eligible receivables of designated customers under the receivables purchase agreement and the issuance of unsecured debt.

We
financed our initial purchase of the accounts receivable with the net proceeds of notes we issued under a senior indenture on December 14, 1998 in an aggregate amount of
U.S.$1.5 billion together with funds provided to us by Petróleos Mexicanos. We refer to the notes issued on December 14, 1998 as the "1998 notes". We have issued the
following additional debt:



13

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When
we wish to refer to the 1998 notes, the February 1999 notes, the February 1999 floating rate notes, the July 1999 notes, the July 1999 additional
issuances and the February 2000 notes together, we refer to the "Notes".

We
used the net proceeds of the Notes we issued subsequent to the issuance of the 1998 notes, as well as additional funds provided by Petróleos Mexicanos through our
subordinated debt, to finance additional purchases of accounts receivable. We may in the future issue additional debt securities or borrow money and use the proceeds to purchase additional existing
accounts receivable or accounts receivable that will be generated in the future, in accordance with the receivables purchase agreement.

Under
a contract called the servicing and collection agency agreement, the collections on accounts receivable we purchase are, absent special circumstances, transferred to us. We use
these collections to service our debt, pay our operating expenses, maintain a liquidity facility with the fiscal agent and purchase additional accounts receivable. In this annual report, when we refer
to the "fiscal agent", we mean JP Morgan Chase and any of its successors or any other fiscal agent which is appointed in accordance with the terms of the fiscal agency agreement.

All
amounts paid by us as the purchase price for accounts receivable under the receivables purchase agreement, regardless of whether the source of such funds is money that we borrow or
collections from accounts receivable previously purchased by us, are applied first to purchase any existing eligible receivables in the order in which they are generated and then to purchase eligible
receivables which will be generated in the future, in the order in which they are generated.

The
following is a breakdown of total revenues by category of activity for the periods indicated:

|                                                       |  | Year ended December 31,
|------------------------------------------------------ |  | -----------------------
|
|
|Income from discounts on purchased accounts receivable |  | $                      
|Other income                                           |  |                        
|                                                       |  |                        
|Total revenues                                         |  | $                      
|                                                       |  |                        

Our
ability to meet our obligations in respect of our outstanding indebtedness, including the Notes, depends on a number of variables, including:



See
"Item 5. Operating and Financial Review and Prospects". The market for crude oil is subject to price volatility and our business and financial condition depend to a large degree on the
international
prices for crude oil. PMI's crude oil exports to the United States are largely comprised of heavy sour crude oil.

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Summary of Principal Agreements and Flow of Funds

GRAPHIC

15

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The following summarizes the principal provisions of the principal agreements governing our business and the flow of funds; the numbers correspond to the numbers
in the chart on the previous page. The descriptions are not in chronological order. See "Description of Principal Agreements" for a more detailed description of these principal
agreements. See also the section entitled "Glossary of Certain Defined Terms Used Primarily Under the Captions "Description of the Principal Agreements,' "Description of the Indenture,' and
"Description of the Insurance Documents"' where we define the capitalized terms that appear in this annual report.

Throughout
this annual report, when we refer to the transaction documents or the documents governing our business, we mean the fiscal agency agreement, each of our debt agreements, the
receivables purchase agreement, the servicing and collection agency agreement, the letter agreement, the designated customer notices, the crude oil sale agreement and any other documents delivered in
connection with any of these agreements. For a more detailed discussion of the meaning of the terms "designated customer", "eligible customer", "eligible receivable", "purchased receivable" and "crude
oil" as used in this annual report see "The Designated Customers and Eligible Receivables".



16

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17

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PMI Services

PMI Services is a company which was organized on March 31, 1988 under the laws of The Netherlands. PMI Services is indirectly wholly-owned by
Petróleos Mexicanos. PMI Services' business is limited to purchasing eligible receivables from PMI at our request and selling them to us.

Taxation of PMI Services

The 1969 Netherlands Corporate Income Tax Act imposes an annual corporate income tax on the taxable amount of a corporation resident in The Netherlands. As a
company incorporated under the laws of The Netherlands, PMI Services is deemed to be resident in The Netherlands for purposes of the Corporate Income Tax Act. Therefore, the profit derived by PMI
Services in connection with its purchase and sale of eligible receivables is subject to Netherlands corporate income tax. The current Netherlands corporate income tax rate is 29% on the first Euro
22,689 of taxable profit and 34.5% on the excess.

The
taxable amount of a corporate taxpayer in The Netherlands is the taxable profit for the year, minus losses of certain other years. Pursuant to Article 8b of the 1969
Netherlands Corporate Income Tax Act, taxable profit is determined on the basis of arm's length principles if transactions are entered into with related parties.

Payments
made by PMI Services to PMI for the purchase of eligible receivables are not subject to Netherlands withholding tax or value added tax.

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Property, Plants and Equipment

We do not own or lease any materially important physical properties or fixed assets.

The Designated Customers and Eligible Receivables

Our primary business is to purchase eligible receivables of designated customers of PMI that have been generated and that will be generated in the future. We buy
the eligible receivables from PMI Services, who, in turn, purchases the eligible receivables from PMI. The receivables purchase agreement governs the terms under which we purchase the receivables and
under which the designated customers and the eligible receivables are selected. For a more detailed discussion of the receivables purchase agreement,
see "Description of Principal AgreementsThe Receivables Purchase Agreement".

Crude Oil

When we use the term "crude oil" in this annual report, we mean extracted oil that has not been refined, excluding condensates and natural gas liquids.
(Condensates are liquid hydrocarbons, such as ethane, propane, butane and certain pentanes, obtained from natural gas and recovered in surface separating facilities. Condensates also include liquid
hydrocarbons condensed in natural gas pipelines. Natural gas liquids include ethane, propane, butanes, pentanes and heavier paraffin hydrocarbons.) The term crude oil refers to heavy crude oil with an
American Petroleum Institute ("API") gravity less than or equal to 25° and light crude oil with API gravity higher than 25°. 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.

When
we use the term "Maya crude oil", we mean crude oil of 30° API gravity or less. The term includes crude oil PMI sells under the name "Maya" as well as crude oil it sells
under the name "Altamira". When we use the term "Isthmus", we mean light crude oil of 32° to 33° API gravity and 1.50% sulfur by weight. When we use the term "Olmeca", we mean
very light crude oil, of 38° to 39° API gravity and 0.95% sulfur by weight.

Selection of the Designated Customers

As of December 31, 2003, the 37 designated customers included 34 United States and Canadian companies, two Aruban companies and one Mexican company, all of
whom:



A
"designated customer notice" is a notice in the form included in the receivables purchase agreement which, among other things, informs the customer that it must make its payments into
the collection account. The parties to the notice must sign it prior to our first purchase of receivables of that designated customer. Designated customer notices may only be modified with the consent
of Petróleos Mexicanos and the fiscal agent in accordance with the terms of each of our debt agreements, including the agreements governing the Notes (here, and throughout this annual
report, "debt agreements" includes any indenture, loan, credit or reimbursement agreement, promissory note or other instrument evidencing or governing our indebtedness).

Under
the receivables purchase agreement, a "customer" is any entity that purchases crude oil from PMI. The "designated customers" are those customers which (a) are listed in a
schedule to the receivables purchase agreement and (b) have received and acknowledged a designated customer notice. The primary criteria for selecting customers to include as designated
customers is that they be a United States or a Canadian person who is a customer of PMI that purchases crude oil.

PMI
may elect to, and in some circumstances must, add a new customer to the list of designated customers, so long as that customer is an eligible customer as described below. More
specifically, PMI has agreed that any person who is organized under the laws of the United States, any state of the United States or Canada and enters into

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a
long-term contract with PMI for the purchase of Maya crude oil shall be made a designated customer within 60 days of entering into that contract.

To
add a new customer, PMI must deliver the following documents to us, PMI Services, the servicer, the fiscal agent, the trustee and any other agent or representative of holders of our
indebtedness:



A
customer may only become a designated customer if it is already an eligible customer. In order to be an "eligible customer", the customer must be:



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The Designated Customers

The following table lists the designated customers as of the date of this annual report and indicates the number of years each has been purchasing Maya crude oil,
originally from Petróleos Mexicanos and, since 1989, from PMI:

|Designated Customer                      |  | Total Years of Relationship
|---------------------------------------- |  | ---------------------------
|Amoco Oil Company                        |  | 28                         
|BP Products North America, Inc.          |  | *                          
|Chevron U.S.A. Inc.                      |  | 27                         
|CITGO International Supply Co.(1)        |  | 26                         
|CITGO Petroleum Corp.                    |  | 5                          
|Clark Refining and Marketing Inc.        |  | 14                         
|Coastal Aruba Refining Company N.V.      |  | 7                          
|Coastal Petroleum N.V.                   |  | 29                         
|Conoco Inc.                              |  | 20                         
|Conoco Phillips Company                  |  | *                          
|Equiva Trading Company                   |  | 5                          
|Exxon Mobil Sales and Supply Corporation |  | 3                          
|Exxon Trading Company International      |  | 26                         
|Farmland Industries, Inc.                |  | 7                          
|Hunt Crude Oil Supply Company            |  | 27                         
|Koch Petroleum Group LP                  |  | 19                         
|Koch Supply and Trading Company(2)       |  | 5                          
|Koch Supply and Trading L.P.(2)          |  | *                          
|Lyondell-Citgo Refining L.P.             |  | 3                          
|Marathon-Ashland Supply L.L.C.           |  | 21                         
|Mobil Sales and Supply Corporation       |  | 29                         
|Morgan Stanley Capital Group, Inc.       |  | 3                          
|Pecten Trading Company                   |  | 28                         
|Petro-Canada                             |  | 9                          
|P.M.I. Norteamérica S.A. de C.V.         |  | 11                         
|Port Arthur Coker Company                |  | 3                          
|The Premcor Refining Group, Inc.         |  | 3                          
|Shell Canada Products Ltd.               |  | 5                          
|Shell Trading USA Company                |  | 1                          
|Texaco International Trader, Inc.        |  | 17                         
|Tosco Refining Company                   |  | 13                         
|Trigeant EP, Inc.                        |  | *                          
|Trigeant Ltd.                            |  | 2                          
|Ultramar, Inc.                           |  | 7                          
|Valero Marketing and Supply Co.          |  | 10                         
|Valero Refining Company-California       |  | 3                          
|Vitol, S.A., Inc.                        |  | 7                          

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The
obligations of Coastal Aruba Refining Company and of Coastal Petroleum N.V., the Aruban designated customers, are guaranteed by The Coastal Corporation, which is
located in the United States.

The
sole Mexican designated customer is an affiliate of Petróleos Mexicanos, P.M.I. Norteamérica, S.A. de C.V., which we refer to as "PMI NASA". PMI
NASA owns 50% of the Deer Park Refining Limited Partnership.

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The
other 50% of the partnership, which holds the Deer Park Refinery located in Texas, is owned by Shell Oil Company, the general manager of the partnership.

The
composition of the pool of eligible receivables of designated customers we own may vary over time, reflecting fluctuations in the level of demand by each of the designated customers.
Some of the designated customers have, in the past, accounted for 10% or more of PMI's exports of Maya crude oil to the United States, Canada and Aruba during certain periods. They may also account
for 10% or more of PMI's receivables during periods in the future. For example, during 2003, Chevron U.S.A. Inc., Exxon Mobil Sales and Supply Corporation and Port Arthur Coker Company each
accounted for 10% or more of the total volumes of Maya crude oil sold to the designated customers during that period. These designated customers or their affiliates are companies which are required to
file periodic reports with the Commission under the Exchange Act. These reports are publicly available, and we refer to them for information about these designated customers.

The Eligible Receivables

We have purchased and will continue to purchase only those receivables of designated customers which are "eligible receivables" under the receivables purchase
agreement.

Under
the receivables purchase agreement, a "receivable" is the indebtedness, payment obligation and accounts receivable that a particular customer owes or will owe to PMI arising from
its purchase of Maya crude oil, or, under limited circumstances, crude oil other than Maya crude oil. To qualify as a receivable, a bill of lading or invoice must have been issued to the customer. A
receivable includes:



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An
"eligible receivable" is a receivable with the following characteristics:



Receivables
that will be generated in the future must meet the same criteria to become eligible receivables.

When
we use the term "purchased receivable" in this annual report, we mean the eligible receivables of designated customers that we have purchased from PMI Services and that PMI Services
has purchased from PMI under the receivables purchase agreement. However, any purchased receivable that we return to PMI Services under the relevant provisions of the receivables purchase agreement is
no longer a purchased receivable. See "Description of Principal AgreementsThe Receivables Purchase AgreementSubstitution and Repurchase of Receivables". To
qualify as an eligible receivable for purposes of the definition of a purchased receivable, a receivable must meet the specifications listed above and relate to a customer that was an eligible
customer as of the date on which the receivable was generated or on which it was purchased, whichever comes later.

For
purposes of the covenant on the availability of eligible receivables of designated customers, the relevant receivable must relate to a customer that, on the day the receivable was
generated, was an eligible customer. See "Description of Principal AgreementsThe Receivables Purchase AgreementCovenants".

Under
the receivables purchase agreement, on our instruction, PMI Services pays the purchase price for eligible receivables into an account designated by PMI. With this payment, PMI
Services purchases from PMI previously generated eligible receivables of designated customers and, when there are no previously generated eligible receivables at that time, future eligible
receivables. PMI Services purchases the eligible receivables in the order in which they are generated. In turn, we purchase the same eligible receivables from PMI Services on the same day that it
purchases those receivables from PMI by depositing the purchase price into an account designated by PMI Services.

PEMEX's Customers and Receivables

Except as otherwise indicated, all figures given in this section regarding percentage of total exports and market share are based on volumes of crude oil and not
on sales revenue. All 2003 export figures are based on preliminary figures which may be adjusted when the export sales are finalized.

Overview

Since its incorporation in 1989, PMI has marketed approximately 99% of PEMEX's crude oil exports. As of May 31, 2004, Petróleos Mexicanos
owns 98.3% of PMI's stock while 1.7% is owned by Banco Nacional de Comercio Exterior, S.N.C., which is in turn 99% owned, directly or indirectly, by the Mexican Government. The Ministry of Energy also
owns 0.0002% of PMI's stock. In the receivables purchase agreement, PEP has agreed to continue to export through PMI at least 90% of its total exports of crude oil.

Here,
and throughout this annual report, the term "export" should be understood to mean any sale or shipment of crude oil from Mexico to a point outside Mexico, excluding any shipment
(1) for the purposes of storage by or on behalf of Petróleos Mexicanos or its Affiliates or (2) for processing and return to Mexico.

23

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During
2003, PMI exported an average of 1,844 tbpd of crude oil, or 55% of PEP's crude oil total production; the remainder was used domestically. During 2002, PMI exported 53.6% of PEP's
incremental crude oil production and during 2001 it exported 56.1% of PEP's incremental crude oil production. Of PMI's crude oil exports during 2003 by volume, approximately:



Exports
of Maya crude oil during 2003 were an average of 1,603 tbpd and accounted for 87% of PMI's total exports of crude oil. During 2003, PMI exported an average of 1,366 tbpd of Maya
crude oil to its designated customers of which:



There
were 37 designated customers as of December 31, 2003.

PMI's
exports of Maya crude oil to the designated customers during 2003 accounted for 100% of PMI's total Maya crude oil exports to customers in the United States, Canada, and Aruba and
85.2% of PMI's total Maya crude oil exports worldwide. Maya crude oil exports to non-designated customers outside the U.S., Canada and Aruba (excluding PMI NASA) accounted for 14.5% of
PMI's total exports of crude oil. Of total Maya crude oil exports not sold to United States, Canadian or Aruban customers (which include PMI NASA), an average of 173.4 tbpd were sold to Europe, 56.6
tbpd to the Far East, 6.2 tbpd to Central America and South America and 1.2 tbpd to Africa.

During
2003, PMI exported to PMI NASA, Petróleos Mexicanos' Mexican affiliate, approximately 1.0% of its total Maya crude oil exports under a long-term
contract.

On
sales made from January 1, 1993 through May 31, 2004 PMI did not record any losses for unpaid receivables relating to purchases of Maya crude oil by the designated
customers. Historically,
approximately 99% of PMI's customers have paid by the payment due date in accordance with the credit terms established in their sales contract.

PMI
makes a significant percentage of its Maya crude oil sales to designated customers under evergreen contracts, which typically allow the parties to terminate the agreement with three
months notice, as well as long-term contracts. PMI exports most of the remaining quantity to the same customers pursuant to separate supply contracts. In 2003, PMI sold approximately 92.3%
of its total Maya crude oil exports under evergreen and long-term contracts for specified volumes to third parties. In 2002, PMI sold approximately 99.9% of its total Maya crude oil
exports under evergreen contracts for specified volumes to third parties.

PMI
focuses its marketing effort on strengthening customer relationships and bases its marketing strategy on maintaining long-term commercial relationships and customer
loyalty. In fact, most of PMI's crude oil customers are long-standing customers that have had relationships with PEMEX for an average of 15 to 20 years.

24

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A
majority of PMI's crude oil customers receive shipments on a regular basis. As a result, there is little seasonality in PMI's sales volumes of crude oil. Crude oil customers are
invoiced through a pricing formulas set forth in the applicable contract. Generally, PMI bases these formulas on market prices and standard payment terms of 30 days after generation of the bill
of lading.

PMI's
Credit Department evaluates the creditworthiness of each potential customer. Based on an evaluation of the customer's financial position, estimated business potential and current
market conditions, the Credit Department recommends a specific credit limit and terms and conditions, including whether the customer should be required to provide advanced payment or a letter of
credit issued by a qualified bank. PMI has a comprehensive program to monitor outstanding receivables.

Crude Oil Exports

The source for some of the information in this section and throughout this annual report relating to the Mexican oil industry is PEMEX's "2003 Statistical
Yearbook". The 2003 Statistical Yearbook is designed to serve as a convenient reference to researchers of the Mexican petroleum industry. It includes selected data from the four subsidiary entities as
well as information on PMI.

The
following graph summarizes the exports of crude oil by PMI and, prior to PMI's incorporation in 1989, Petróleos Mexicanos:

GRAPHIC

Sources:PEMEX's 2003 Statistical Yearbook.

25

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The
following tables set forth the composition and weighted average prices of PMI's exports of crude oil for the periods indicated:

|                                   |  | Year Ended December 31, | 
|---------------------------------- |  | ----------------------- | 
|
|
|Crude Oil Exports (by volume)      |  |                         | 
|Olmeca (API gravity of 38°-39°)    |  | 434                     | 
|Isthmus (API gravity of 32°-33°)   |  | 190                     | 
|Maya (API gravity of 21°-22°)      |  | 920                     | 
|Altamira (API gravity 15.0°-16.5°) |  | 9                       | 
|                                   |  |                         | 
|Total                              |  | 1,554                   | 
|                                   |  |                         | 

---

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

---

Crude oils can also be classified by their amount of sulfur content by weight. "Sour" crudes contain 3.4% or greater sulfur content by weight and
"sweet" crudes contain less than 1.0% sulfur content by weight. Substantially all of PMI's exports are classified as sour crude.

Geographic Distribution of Exports

In 2003, 96.6% of PMI's exports were to countries in the Western Hemisphere. The balance was exported to other countries. As of December 31, 2003, PMI had
37 customers in 14 countries. Among these countries, customers in the United States, Spain, Netherlands Antilles and Japan have consistently been PEMEX's largest customers. During 2003, crude oil
exports were distributed as follows:

Exports by Country of Destination of Shipment

|Country                  |       | Percentage of
Exports |      
|------------------------ | ----- | --------------------- | -----
|United States of America |       | 78.0                  | %    
|Spain                    |       | 7.8                   |      
|Netherlands Antilles     |       | 5.7                   |      
|Canada                   |       | 1.6                   |      
|Japan                    |       | 0.6                   |      
|Others                   |       | 6.4                   |      
|                         |       |                       |      
|                         | Total |                       | 100.0
|                         |       |                       |      

---

26

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The following table sets forth the geographic distribution of PMI's exports of crude oil from January 1, 1999 until December 31, 2003. The table also presents the
distribution of exports among PEMEX'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              |       | 1,196           |      
|Europe                                |       | 177             |      
|Central and South America             |       | 134             |      
|Far East                              |       | 42              |      
|Africa                                |       | 5               |      
|                                      |       |                 |      
|                                      | Total |                 | 1,554
|                                      |       |                 |      
|Olmeca (API gravity of 38°-39°)       |       |                 |      
|United States and Canada              |       | 432             |      
|Others                                |       | 2               |      
|                                      |       |                 |      
|                                      | Total |                 | 434  
|                                      |       |                 |      
|Isthmus (API gravity of 32°-33°)      |       |                 |      
|United States and Canada              |       | 109             |      
|Others                                |       | 81              |      
|                                      |       |                 |      
|                                      | Total |                 | 190  
|                                      |       |                 |      
|Maya (API gravity of 21°-22°)         |       |                 |      
|United States and Canada              |       | 646             |      
|Others                                |       | 274             |      
|                                      |       |                 |      
|                                      | Total |                 | 920  
|                                      |       |                 |      
|Altamira (API gravity of 15.0°-16.5°) |       |                 |      
|United States and Canada              |       | 9               |      
|Others                                |       |                |      
|                                      |       |                 |      
|                                      | Total |                 | 9    
|                                      |       |                 |      

---



The following table sets forth information on PMI's exports to the designated customers:

27

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|                                                                                                     |  | 2001 |   | 2002 |   | 2003 |  
|---------------------------------------------------------------------------------------------------- |  | ---- | - | ---- | - | ---- | -
|Exports of all types of crude oil to designated customers as a percentage of total exports           |  | 84.2 | % | 85.3 | % | 85.5 | %
|Exports of Maya Crude Oil to designated customers as a percentage of total exports of Maya Crude Oil |  | 64.1 |   | 70.3 |   | 85.2 |  

Because
sales to the designated customers change over time, the following tables are not necessarily indicative of future sales.

Of
the designated customers, only PMI NASA is an affiliate of Petróleos Mexicanos. PMI NASA owns 50% of the Deer Park Refining Limited Partnership. The other 50% of the
partnership, which holds the Deer Park Refinery located in Texas, is owned by Shell Oil Company, the general manager of the partnership.

The
following table sets out the volumes of Maya crude oil sold to the designated customers, broken down between PEMEX affiliates and third parties, in the period from 1999 through 2003.

|               |  | 1999 |  | 2000  |   | 2001 |  | 2002  |   | 2003  | 
|-------------- |  | ---- |  | ----- | - | ---- |  | ----- | - | ----- | 
|
|PMI NASA       |  | 10   |  | 1.4   | % |     |  |      |   | 48    | 
|Non-Affiliates |  | 748  |  | 98.6  |   | 891  |  | 100.0 |   | 1,076 | 
|               |  |      |  |       |   |      |  |       |   |       | 
|Total          |  | 759  |  | 100.0 | % | 891  |  | 100.0 | % | 1,125 | 
|               |  |      |  |       |   |      |  |       |   |       | 

---

The
following table provides a breakdown of the sales of crude oil by type during 2003 to PMI's customers, identifying sales to affiliates and third parties.

Total Crude Oil Exported by Type as of December 31, 2003  Type of Crude Oil Exported

|              |       | Isthmus |    | Olmeca |     | Maya |       | Altamira |   | Total  
|------------- | ----- | ------- | -- | ------ | --- | ---- | ----- | -------- | - | -------
|
|PMI NASA      |       |        |    | $      |    |      | 2.2   |          | $ | 24.9   
|Third parties |       | 25      |    |        | 255 |      | 213.0 |          |   | 2,282.8
|              |       |         |    |        |     |      |       |          |   |        
|              | Total |         | 25 |        | $   | 255  |       | 216.0    |   | $      
|              |       |         |    |        |     |      |       |          |   |        

---

The following table sets forth the accounts receivable generated and outstanding as of December 31, 2003, corresponding to export sales of
Maya crude oil to the designated customers, broken down by affiliates and third parties:

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Accounts Receivable Purchased by Pemex Finance by Customer Affiliation for Designated Customers  (Maya crude oil only)  (as of December 31, 2003)

|Type of Customer |       | Accounts Receivable
(millions of U.S. dollars)
|---------------- | ----- | ----------------------------------------------
|PMI NASA         |       |                                               
|Third parties    |       | $                                             
|                 |       |                                               
|                 | Total |                                               
|                 |       |                                               

PMI's Delinquency and Loss Experience

PMI did not incur any losses for unpaid receivables on its sales made from January 1, 1993 through December 31, 2003. As of December 31,
2003, PMI was not required to record on its books provisions for losses on accounts receivable corresponding to export sales of crude oil. However, PMI's loss and delinquency experience for
receivables, including purchased receivables sold to us under the receivables purchase agreement, in the future may be different than PMI's historical experience.

As
of December 31 for each year from 1996 to 2000, PMI had no past due receivables, compared to past due receivables of U.S.$19.9 million as of December 31, 1995. As
of December 31, 2003 and 2002, PMI had no past due receivables, compared to past due receivables of U.S.$13.57 million as of December 31, 2001, which was paid in full on
January 2, 2002. The following table sets forth the maximum number of days of past due accounts during the years indicated.

Year

Maximum Number of Days of
Past Due Accounts1996

41997

71998

51999

32000

42001

42002

72003

6


PMI's
customers subsequently paid all the past due receivables at these dates in full, with interest.

Average Delinquencies

Approximately 98% of PMI's customers pay on the payment due date in accordance with the credit terms established in their respective sales contracts, and the
remainder pay within 30 days thereafter. PMI's low rate of payment delinquencies is attributable to:



The
majority of untimely payment delinquencies which PMI has experienced are a result of administrative problems which are settled within seven days. Historically, PMI's customers have
paid the invoice amounts in full regardless of disputes related to price and claims of quality and quantity. These disputes are settled through credit and debit notes.

PMI's
management is unaware of any trend that would change its portfolio performance.

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The
following table sets forth information concerning the aging schedule for accounts receivable generated by export sales of crude oil for each quarter during the period from
January 1, 1999 through December 31, 2003.

P.M.I. Comercio Internacional, S.A. de C.V.  Historic Aging Schedule(1)  (by quarter)

|             |  |   |          | Past due at end of period indicated
|------------ |  | - | -------- | -----------------------------------
|
|
|
|1999         |  |   |          |                                    
|March 31     |  | $ | 1,193.04 |                                    
|June 30      |  |   | 1,785.64 |                                    
|September 30 |  |   | 2,295.10 |                                    
|December 31  |  |   | 2,936.03 |                                    
|2000         |  |   |          |                                    
|March 31     |  |   | 3,140.93 |                                    
|June 30      |  |   | 3,470.06 |                                    
|September 30 |  |   | 3,902.54 |                                    
|December 31  |  |   | 3,965.39 |                                    
|2001         |  |   |          |                                    
|March 31     |  |   | 3,171.53 |                                    
|June 30      |  |   | 3,046.38 |                                    
|September 30 |  |   | 3,197.13 |                                    
|December 31  |  |   | 2,760.06 |                                    
|2002         |  |   |          |                                    
|March 31     |  |   | 2,312.68 |                                    
|June 30      |  |   | 3,293.27 |                                    
|September 30 |  |   | 3,480.18 |                                    
|December 31  |  |   | 3,726.32 |                                    
|2003         |  |   |          |                                    
|March 31     |  |   | 4,527.50 |                                    
|June 30      |  |   | 3,453.20 |                                    
|September 30 |  |   | 4,308.23 |                                    
|December 31  |  |   | 4,073.31 |                                    

---



All of PMI's customers pay in one of three manners:



During
2003, 14.9% of PMI's export sales of crude oil were backed by letters of credit. The remainder was paid from open accounts. The manner in which each customer pays for the crude
oil it purchases reflects PMI's assessment of the credit risk that customer presents. PMI's financial area carries out the evaluation and monitoring

30

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of
the creditworthiness of each customer, and the assessment of the manner in which it should pay. Under the agreements governing Pemex Finance's operations and purchase of receivables, PMI agreed to
apply its credit and collection policies to all of the designated customers, including the affiliated designated customer. The financial area receives information from different sources, including
audited financial records, commercial and banking references and external credit reports prepared by credit and rating agencies. This assessment, which involves financial analysis, focuses primarily
on the customer's capacity to generate cash flow and its prior credit history. The financial area compares the client's financial structure, liquidity, cash flow and profitability ratios with the
industry and regional market in which the company operates. PMI also considers country and sovereign risk in the analysis. Based on this information, PMI's financial area issues an opinion to the
credit committee on the creditworthiness of the future customer.

The
PMI credit committee is responsible for evaluating certain types of credits. More specifically, credit committee approval is required for:



All
other cases are subject to assessment and action by the financial area, which reports its recommendations and actions to the credit committee. The credit committee meets at least
once a month. Its members include PMI's directors and finance manager. At least once a year the financial area will reevaluate its recommendations regarding each credit line. All lines of credit are
submitted to the credit committee for renewal at maturity. If a customer has not purchased from PMI during the prior two years, its line of credit will not be renewed until it is needed.

The
financial area takes primary responsibility for monitoring PMI's credit exposure on a daily basis. The financial area is a subdivision of the finance department, which is composed of
the finance manager, the accounting manager, the risk management department, the systems manager and the treasurer.

Contract Terms and Conditions

PMI makes a significant percentage of its crude oil sales under evergreen contracts, which typically allow the parties to terminate the agreement with three
months notice. PMI exports most of the remaining quantity to the same customers that purchase under evergreen contracts but under separate supply contracts, applying the pricing formula included in
the evergreen contracts. PMI's export sales of crude oil are conducted on a "free-on-board" (FOB) basis. In practically all cases, title to the crude oil passes to the customer
upon the crude's loading on the ship. The invoice prepared by PMI's treasury department states the final price for the quantity delivered. PMI generally prepares the invoice within five days of the
delivery of crude oil, and presents it to the customer immediately by fax or telex transmission. The full amount of the invoice is due within the term established by the contract for such customer,
which is generally 30 days from the day the bill of lading is generated. The bill of lading is generated when the crude oil is loaded onto the ship. PMI typically imposes interest on a daily
basis equivalent to an annual rate of Prime rate plus 2%, not compounded, for all past due accounts. PMI may provide discounts or rebates for advance payments of any amount due.

Sales
prices for Mexican crude oil are based on formulas which vary for each type of crude oil and for each geographic region in which specific crude oil is sold. These formulas consider
international market quotations for one or more benchmark crude oil or products and a constant set by PEMEX's pricing committee (which consists of representatives from the Ministry of Energy, the
Ministry of Finance and
Public Credit, the Ministry of Economy, the General Comptroller's Office, Banco de México and PEMEX). The pricing formulas differ by consuming regions and the type of crude oil.

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Monitoring of Existing Accounts

PMI
has a comprehensive program for monitoring its outstanding receivables. Senior management in the commercial and finance areas is notified of any overdue payments by a customer on a
daily basis, and may suspend future sales to that customer or cancel its credit unless the customer promptly pays its overdue invoices. The credit department also monitors the creditworthiness of
existing customers, including affiliated customers, adjusting the terms of sale to reflect changes in each customer's creditworthiness.

Marketing

PMI
focuses its marketing effort on strengthening customer relationships by analyzing and understanding specific purchasing patterns, closely monitoring market conditions and reacting
promptly to price variations. Its marketing strategy is based on maintaining long-term commercial relationships and customer loyalty. In fact, most of PMI's crude oil customers are
long-standing customers that have had relationships with PMI or, prior to PMI's incorporation in 1989, Petróleos Mexicanos for an average of 15 to 20 years.

In
2003, all of PMI's crude oil export sales to customers qualifying as designated customers were made pursuant to PMI's general terms and conditions to customers with which it maintains
long-standing commercial relationships. In 2003, all of the invoices for crude oil export sales were paid within the established credit terms. PMI has a policy of not selling crude oil on
the spot market. PMI has a policy under which it only sells its crude oil to customers that own or operate refineries.

Sales
to Affiliates. PMI NASA is PMI's only current customer which both qualifies as a designated customer and is an Affiliate of Petróleos
Mexicanos. It has entered into a long-term supply contract with PMI which requires the supply of minimum quantities of crude oil and other feed stocks under an evergreen contract, which
has a three month phase-out clause. PMI exported 19 tbpd crude oil to PMI NASA during 2003.

Sales
to Third Parties. PMI's sales to third parties for exports of crude oil, including sales to the designated customers with which it maintains
long-standing commercial relationships, are made at market prices pursuant to PMI's general terms and conditions. Among its customers are most of the major oil companies and other large
private companies. Sales under PMI's general terms and conditions are priced in U.S. dollars.

DESCRIPTION OF PRINCIPAL AGREEMENTS

We have entered into several agreements which govern the purchase, sale and collection of the receivables described in this annual report. The first, the
receivables purchase agreement, is among PMI Services, PMI, PEP and Pemex Finance. Its main purpose is to specify the terms by which PMI Services buys receivables from PMI and we buy receivables from
PMI Services. The second agreement is the fiscal and paying agency agreement we entered into with The Chase Manhattan Bank, as fiscal and paying agent, and Chase Manhattan Bank Luxembourg, S.A., as
paying agent. The fiscal agency agreement establishes many of the important covenants and events of default with which we must comply. It also governs the fiscal agent's role as our principal paying
agent for the payment of principal, interest and premium, if any, in respect of our Indebtedness, including the Notes.

The
third agreement is the servicing and collection agency agreement, and is among Pemex Finance, PMI, PMI Services, Petróleos Mexicanos as investment manager and UBS AG
as the initial collection agent. Standard Chartered Bank replaced UBS AG as collection agent in October 1999. This agreement sets forth the procedures for the servicing, managing and collection
of the receivables that have been sold by PMI to PMI Services and thereafter to us. Finally, the fourth agreement is the letter agreement between Petróleos Mexicanos and Pemex Finance.
In this agreement, Petróleos Mexicanos agrees to cause PEP, PMI and PMI Services to comply with their material obligations under the receivables purchase agreement and the crude oil
sale agreement governing the sale of crude oil from PEP to PMI.

All
four of these agreements are dated as of December 1, 1998; the receivables purchase agreement and the fiscal agency agreement were each amended as of February 10, 2000.

32

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The
following is a summary of the material provisions of these principal agreements, as amended. Each of the above-mentioned agreements is included as an exhibit to this annual report.
These exhibits are incorporated in this annual report by reference to the registration statement of Pemex Finance and Petróleos Mexicanos on Form F-4 dated
September 30, 1999 (registration statement no. 333-10920) and, in the case of the amendments to the receivables purchase agreement and the fiscal agency agreement, to the
registration statement of Pemex Finance and
Petróleos Mexicanos on Form F-4 dated September 27, 2000 (registration statement no. 333-12614).

Copies
of these agreements are also available for inspection at the principal office of the fiscal agent in the City of New York, which is presently located at JP Morgan Chase, Capital
Markets Fiduciary Services, 450 West 33rd Street, 15th Floor, New York, New York 10001.

See
the section entitled "Glossary of Certain Defined Terms Used Primarily Under the Captions "Description of the Principal Agreements,' "Description of the Indenture,' and "Description
of the Insurance Documents"' for definitions of capitalized terms that appear in this annual report.

The Receivables Purchase Agreement

We and PMI Services purchase eligible receivables under the receivables purchase agreement. More specifically, under the receivables purchase agreement, subject
to payment of the purchase price:



We
and PMI Services purchase the eligible receivables in the order in which they are or will be generated. Thus, we acquire title not only to some of the current eligible receivables of
designated customers, but also to some of their future receivables. A receivable is considered "generated" at the moment a customer becomes obligated to pay PMI for crude oil. The obligation to pay is
the receivable.

The
purchase price that we and PMI Services pay for each receivable is determined by discounting the face value of the purchased receivable by the number of days between the date the
receivable was purchased and the day on which it is due and payable at a discount rate. The discount rate is equal to the weighted average of the yield of our outstanding Indebtedness on the date on
which the purchased receivable is sold to us plus 50 basis points. This discount at which eligible receivables are purchased will be adjusted upward in some limited circumstances to reflect a change
in the delinquencies, if any, of the designated customers.

In
the ordinary course, we will buy receivables which are generated by the sale of Maya crude oil. However, we consider any date on which the monthly average amount of PMI's exports of
Maya crude oil to designated customers outside of Mexico for the six months prior to that date is less than 450 tbpd to be a "Maya shortfall day" under the receivables purchase agreement. On any Maya
shortfall day, PMI will be obligated to sell to PMI Services and PMI Services will be obligated to sell to us all its present and future rights, title and interest in existing and future eligible
receivables of designated customers generated or to be generated in connection with the export of crude oil other than Maya crude oil, including those receivables existing at the close of business on
the Maya shortfall day. In addition, we, PMI Services and PMI from time to time may agree to the purchase and sale of existing and future receivables generated or to be generated from the shipment of
crude oil other than Maya.

33

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In addition, PMI agrees that any person who is a United States or Canadian person who enters into a long term contract for the purchase of Maya crude oil shall be made a designated
customer within 60 days of entering into that contract.

Representations and Warranties

PMI makes some representations and warranties on each date on which we or PMI Services purchase eligible receivables, including that:



In
addition, PMI Services represents that on each date on which it sells us eligible receivables we will have all right, title and interest of PMI Services in the purchased receivables
free and clear of any lien attributable to PMI Services.

Covenants

We, PEP, PMI and PMI Services have made a number of covenants under the receivables purchase agreement, some of which are described below.

PEP
has agreed that it will not export crude oil, directly or indirectly, to any designated customer other than through PMI. Further, PEP has agreed that it will export at least 90% of
its total exports of crude oil through PMI. Compliance with this agreement is tested by looking at 90 day periods. However, if (1) PMI ceases to be an Affiliate of
Petróleos Mexicanos or PEP or (2) PMI becomes bankrupt or insolvent, PEP has agreed that it shall instead export at least 90% of its total crude oil exports through PMI Services.

PMI
Services has also agreed that:



34

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Finally,
PMI has agreed:



35

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Substitution and Repurchase of Receivables

In most cases, PMI shall not have any:



However,
PMI may elect to repurchase, directly or indirectly, receivables it sold to us at any time under the following circumstances:



If
PMI elects to repurchase any purchased receivable affected by any of these three factors, it shall do so at a repurchase price equal to the purchase price we originally paid for that
receivable plus a repurchase adjustment. This adjustment shall be calculated in the following way:



36

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Moreover,
the sale of a purchased receivable will be rescinded if at any time PMI:



Upon
becoming aware of a failure by PMI, PMI Services or PEP to comply with certain covenants, we may give notice of that failure to PMI and PMI Services. Upon receipt of that notice, we
may elect to rescind prior sales of purchased receivables sold to us prior to that date for which no collections have been received by the collection agent. However, we may not elect to rescind prior
sales of purchased receivables which have become delinquent, meaning not paid within five business days of becoming due.

If
a sale is rescinded, we shall return the relevant purchased receivable to PMI Services, and PMI Services shall return that purchased receivable to PMI. In return, PMI Services will
deposit in the collection account an amount calculated in the same manner that the repurchase price was calculated, as described above. Immediately upon such deposit by PMI Services, PMI will pay PMI
Services an equal amount and PMI Services shall return to PMI the receivables that we returned to PMI Services. The rescission will not be effective until the repurchase price has been deposited in
the collection account.

Replacement: Circumstances in Which PMI Services or PMI Will Assume the Other's Obligations

PEP shall be required to export crude oil through PMI Services instead of PMI in the event that:



In
connection with the issuance of the February 1999 Notes, the parties to the receivables purchase agreement and Petróleos Mexicanos entered into a supplemental
agreement. Under this supplemental agreement, if specified events related to bankruptcy, merger or sale of the assets of PMI Services occur, PMI will agree to perform the material obligations of PMI
Services set forth in the receivables purchase agreement, the servicing and collection agency agreement, the letter agreement and each designated customer notice. Further, if a PMI bankruptcy or
insolvency event occurs or if PMI ceases to be an Affiliate of Petróleos Mexicanos or PEP, PEP will agree to perform the material obligations of PMI Services set forth in those
agreements. In other words, under these circumstances, PMI will sell receivables directly to us.

Assignment

Neither PMI nor PMI Services may assign its obligations under the receivables purchase agreement other than:



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In
both exceptions, the assignee of PMI Services must be an entity which, in the case of a bankruptcy or insolvency event of PMI, will not be treated as part of the bankrupt estate of
PMI. In addition, in each case (A) the assignee must expressly assume all the obligations of PEP, PMI Services or PMI, as the case may be, under the receivables purchase agreement and
(B) the following documents must be delivered to us prior to the assumption:

| | (1) |  | (a) |  | opinions of counsel to the assignee with respect to the laws of New York, Mexico and the jurisdiction where the assignee is located stating that:
| | --- |  | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------



Substitution to Mitigate Taxes

The rights and obligations of PMI or PMI Services may be assigned to another entity that assumes those rights and obligations without the consent of the fiscal
agent for several reasons related to taxation. Namely, this assignment may be made to mitigate any increase in taxes payable by PMI with respect to the transactions contemplated by the receivables
purchase agreement as a consequence of (1) a change in tax laws or regulations in Mexico or (2) any change in the application or official interpretation of those laws or regulations. PMI
or PMI Services can only assign its rights and
obligation under these circumstances if, after giving effect to the assignment and assumption, the following conditions are fulfilled:



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No Filing or Recording Required

No law in Mexico, The Netherlands or the Cayman Islands requires filing or recording with any governmental office for the establishment, preservation, protection,
perfection or priority of an ownership or security interest in purchased receivables. Under these laws, and under New York law, no further act will be required to establish, preserve, protect, perfect
or establish the priority of, our or PMI Services' ownership interest or security interest in the purchased receivables upon:



Governing Law, Jurisdiction and Waiver of Immunity

The receivables purchase agreement is governed by and interpreted in accordance with the laws of the State of New York with the following exceptions:



We
and PEP have appointed the Consul General of Mexico in New York City and his successors as our process agent. PMI and PMI Services have appointed Curtis, Mallet-Prevost, Colt and
Mosle acting through their offices in New York as their process agent. This means that process may be served on these agents in any action based upon the receivables purchase agreement which may be
instituted in the Supreme Court of the State of New York, County of New York, any federal court sitting in the Borough of Manhattan, The City of New York and any appellate court or body thereto. We,
PEP, PMI and PMI Services have each:



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PEP
and PMI have reserved the right to plead sovereign immunity under the United States Foreign Sovereign Immunities Act of 1976 with respect to actions brought against either of them
under United States federal securities laws or any state securities laws. Further, PEP's and PMI's appointment of the applicable process agent as its agent for service of process will not extend to
these actions. In the absence of this waiver of immunity by PEP, it would not be possible to obtain a judgment in an action brought in a United States court against PEP, unless such court were to
determine that PEP is not entitled under the Immunities Act to sovereign immunity with respect to that action. The same is true of PMI. Even if a United States judgment could be obtained in any action
under the Immunities Act, it may not be possible to obtain in Mexico a judgment based on such a United States judgment. Moreover, execution upon property that PEP or PMI may have in the United States
to enforce a judgment obtained under the Immunities Act may not be possible except under the limited circumstances specified in the Immunities Act.

Article 27
of the Political Constitution of the United Mexican States, Articles 16 and 60 of the General Law on National Patrimony (and other related articles), Articles 1, 2, 3,
4 (and related articles) of the Regulatory Law to the Regulatory Law, Articles 15, 16 and 19 of the Regulations to the Regulatory Law, Articles 1, 2, 3, 4 (and other related articles) of the Organic
Law of Petróleos Mexicanos and Subsidiary Entities and Article 4 of the Federal Code of Civil Procedures of Mexico establish, among other things, that:



As
a result, notwithstanding PEP's waiver of immunity described in the preceding paragraph, a Mexican court may not enforce a judgment against PEP by ordering the attachment of its assets.

Termination

The receivables purchase agreement may be terminated by the parties at any time 90 days after notification by the fiscal agent that we have satisfied and
discharged all of our obligations under any of our Indebtedness and that Indebtedness has ceased to be of further effect.

Limitation on Contract Liability



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The Fiscal Agency Agreement

Covenants

We have made a number of covenants under the fiscal agency agreement for the benefit of the holders of all our Indebtedness. We must comply with these covenants
so long as (a) any of our Indebtedness is issued and outstanding, or (b) a commitment to purchase or extend Indebtedness from or to us is in effect. In the future, when we issue new
Indebtedness, the agreements or instruments evidencing or governing the new Indebtedness may require us to comply with additional covenants, or may excuse us from compliance with some of the covenants
of the fiscal agency agreement we list in this annual report. However, these variations will only apply to the new Indebtedness, and not to our existing Notes.

Negative Pledge

We will not, directly or indirectly, incur any lien, other than a lien permitted under the fiscal agency agreement on or with regard to any of our property or
assets in order to secure Indebtedness unless this lien secures our outstanding Indebtedness equally and ratably.

This
prohibition applies to all kinds of property, real, personal or mixed, including tangible and intangible property, including capital stock.

When
we use the term "lien" we mean, with respect to any property of any kind, any mortgage or deed of trust, pledge, hypothecation, assignment, security interest or other security or
similar agreement of any kind on or with respect to the property, including any conditional sale or other title retention agreement that has substantially the same economic effect as any of the
foregoing.

Under
the fiscal agency agreement, however, we are permitted to incur "permitted liens", including liens used to secure the purchase price of any kind of property or assets we acquired
after the date of the fiscal agency agreement, or to secure Indebtedness incurred solely to finance the acquisition of property or assets we acquired after the date of the fiscal agency agreement, in
both cases other than receivables we purchase under the receivables purchase agreement. In addition:



Use of Proceeds

We will apply the net proceeds of all the Indebtedness we incur to:



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Financial Covenants

We agree to comply with certain financial covenants on each date of determination. By "date of determination", we mean the first day of every month, any date on
which we incur Indebtedness or any date on which we make a restricted payment, as described below in "Limitation on Restricted Payments". More specifically, on these dates of
determination we will not allow:



Debt Incurrence

We will not incur Indebtedness unless, after giving effect to the new Indebtedness,



Compliance with Receivables Documents

We will perform and comply with each of our obligations, covenants and agreements under the receivables purchase agreement, the servicing and collection agency
agreement, the letter agreement and the designated

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customer
notices. To the extent that any provision in any of these documents (a) permits us to waive compliance with that provision or (b) requires that we find any document, opinion or
other instrument or any event or condition acceptable or satisfactory, for purposes of the fiscal agency agreement, we will comply with that provision only if: the waiver is permitted or approved in
accordance with each debt agreement under which any of our Indebtedness was issued and is outstanding or under which any commitment to purchase or extend our Indebtedness is in effect; and the
document, opinion, instrument, event or condition is so permitted or approved.

No
amendment to, or waiver of, any provision of defined terms made pursuant to the receivables purchase agreement, the servicing and collection agency agreement, the letter agreement or
the designated customer notices will be effective unless it is permitted or approved in accordance with the terms of our debt agreements.

Payment of Obligations; Compliance With Obligations

We agree to pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all of our obligations, except where:



We
shall defend or, in accordance with the servicing and collection agency agreement, cause the servicer to defend, all of our rights, title and interest in, to and under the purchased
receivables, whether now existing or to be generated in the future, against all claims of third parties. We will fulfill all our material obligations in connection with each purchased receivable and
will do nothing to impair our rights in each purchased receivable.

Books and Records

We agree in all material respects to keep proper books of records and account. We agree to maintain full, true and correct entries in these books in conformity
with IAS or U.S. GAAP, as applicable, as well as all requirements of law of all dealings and transactions in relation to our business and activities.

For
purposes of this annual report, when we use the term "requirements of law" we mean, as to any person, (a) the certificate of incorporation and by-laws or other
organizational or governing documents of that person, and (b) any law, treaty, rule or regulation or a final determination of a court or other governmental authority. In each case, we mean
those documents, laws, treaties, rules, regulations or determinations which are applicable to or binding upon that person or any of its property or to which that person or any of its property is
subject. However, if the violation of any provision of such document, law, treaty, rule, regulation or final determination will not have a Material Adverse Effect, then that document or law will not
be a requirement of law.

Compliance with Law and Contractual Obligations.We agree to comply with all requirements of law and the provisions of the
receivables purchase agreement, the servicing and collection agency agreement, the letter agreement, the designated customer notices, the fiscal agency agreement, each of our debt agreements, the
crude oil sale agreement governing PEP's sale of crude oil to PMI and all our other material contractual obligations in all material respects.

Delivery of Collections

If a designated customer pays collections directly to us, we agree to transfer or deposit those collections into the collection account as soon as practicable in
accordance with the servicing and collection agency agreement.

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Separate Corporate Existence

We agree:



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Preservation of Corporate Existence

We agree:



Assessment

We agree to pay and discharge all taxes, assessments, levies and other governmental charges that are imposed on us. However, we do not need to meet this
requirement for taxes, assessments, levies and other governmental charges:



Limitation on Transfers of Receivables; Investments

We agree not to, at any time, sell, transfer or otherwise dispose of any of the purchased receivables, collections or proceeds on the purchased receivables,
except:



We
also covenant not to make any investment other than a "permitted investment", as described below.

An
"investment" means:



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Extensions
of trade credit on commercially reasonable terms in accordance with normal trade practices, and any increase in the equity ownership of an entity resulting from retained
earnings are not included in this definition of investment. Our purchase of eligible receivables under the receivables purchase agreement are also not considered investments under this definition.

"Permitted
investments", which are not prohibited under this covenant, are:



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Our Business

We agree not to engage at any time in any business or business activity other than:



We
also covenant and agree not to enter into or be a party to any agreement or instrument other than in connection with the foregoing.

Agreements

We shall not:



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Offices

We agree that we (a) will not move the location of our chief executive office or our legal head office to a new location within or outside the Cayman
Islands and (b) will not move the location of any of the offices where we keep our records concerning the purchased receivables to a new location within or outside the Cayman Islands or Mexico.
However, we may do so if we:



Charter

We agree that we shall not amend or make any modification to our Memorandum and Articles of Association if that modification would impair the interests, rights or
remedies of the holders of our outstanding Indebtedness under the receivables purchase agreement, the servicing and collection agency agreement, the letter agreement, the designated customer notices,
the fiscal agency agreement, each of our debt agreements and the crude oil sale agreement governing PEP's sale of crude oil to PMI and any other documents in connection with the foregoing agreements.
However, we may amend or modify our Memorandum and Articles of Association if we make that modification (a) pursuant to changes in law of the jurisdiction of our incorporation or (b) to
change our name, registered agent or the address of our registered office.



With limited exceptions, we shall not:



Under
the fiscal agency agreement, these three kinds of payments are considered "restricted payments".

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We may make such payments, declarations or distributions if, after giving effect to that restricted payment:



We
shall not make any payment in respect of unscheduled optional or mandatory prepayments, redemption or repurchases of our Indebtedness, whether directly or indirectly, whether in cash
or our property or obligations, unless the payment is of debt service that has been declared immediately due and payable following the occurrence of a default or an event of default under any of our
debt agreements. However, we may make these payments if, after giving effect to the restricted payment as if it were included in the payment of principal, interest, premium and other amounts
(including fees and commissions) on our Indebtedness that is scheduled to become due and payable on or after we make the restricted payment:



Events of Default

Under the terms of the fiscal agency agreement, each of the following constitutes an "event of default":





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| | (j) |  | (A) |  | except with respect to the case described in (h) or (i) above, failure on the part of any of PMI, PEP, Petróleos Mexicanos, PMI Services or us to remedy a material breach of its or our material
obligations under the receivables purchase agreement or the letter agreement, and that failure continues for a period of 60 days; or
| | --- |  | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |  | (B) |  | failure by PEP to export at least 90% of its exports through PMI, if such failure continues for 30 days. However, if PEP's exports through PMI are less than 50% of PEP's exports, the 30 day cure period would not apply;                                                                                                            



| |  |  | (A) |  | PEP, PMI, PMI Services or us made pursuant to the sections of the receivables purchase agreement entitled (1) "Conduct of Business", "Organization; Powers", "Litigation;
| |  |  | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | (l) | (A)                                                                                                                                                                                      | the Mexican Government, Petróleos Mexicanos or any of its Affiliates takes action, which is not withdrawn, rescinded or reversed within 10 days, that prevents Petróleos Mexicanos, PMI Services, PMI or PEP
(or any entity that has assumed the obligations of Petróleos Mexicanos, PMI Services, PMI or PEP under the receivables purchase agreement, the servicing and collection agency agreement, the letter agreement, each designated customer notice and
the crude oil sale agreement governing PEP's sale of crude oil to PMI) from:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |     |                                                                                                                                                                                          | (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |     |                                                                                                                                                                                          | (2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |     | (B)                                                                                                                                                                                      | or either Petróleos Mexicanos or PEP:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |     |                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |     |                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |     |                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | (m) | (A)                                                                                                                                                                                      | any of Petróleos Mexicanos, PEP, PMI, PMI Services or us (or any entity that has assumed their or our obligations) revokes, terminates or repudiates the fiscal agency agreement, the receivables purchase agreement, the servicing and collection
agency agreement, the crude oil sale agreement governing PEP's sale of crude oil to PMI or the letter agreement; or                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |     | (B)                                                                                                                                                                                      | any of those agreements ceases to be in full force and effect other than pursuant to its terms.                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |     | However, if their or our revocation, termination, cessation or repudiation could not reasonably be expected to result in a Material Adverse Effect, it shall not be an event of default;
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | (n) |                                                                                                                                                                                          | we fail to purchase eligible receivables, generated or to be generated, arising out of the sale of crude oil other than Maya crude oil within 10 business days after the date when we are required to do so under the receivables purchase agreement;
or                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | (o) |                                                                                                                                                                                          | we fail to add a new customer to the list of designated customers within 60 days of the date when we are required to do so under the receivables purchase agreement.                                                                                                                                                                                                                                                                                                                                                                         
|The "Issuer Notice" mentioned above in connection with certain events of default is a written notice sent to us by a holder of our Indebtedness, or the relevant trustee or other representative of the holder, specifying that it is an Issuer Notice for
purposes of the fiscal agency agreement. To the extent that the debt agreement under which the relevant Indebtedness is issued specifies procedures, requirements or conditions for the giving of an Issuer Notice, the notice must be given in compliance
with these requirements.

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Any individual debt agreement may provide that one or more of the foregoing events of default do not apply to debt issued under such agreement or may include
additional or different events of default. However, such variations shall only apply to the Indebtedness issued under such debt agreement, and not to the Notes.

Specified Events

Under the terms of the fiscal agency agreement, each of the following constitutes a "specified event":



Liquidity Facility

Under the fiscal agency agreement, we have established and are required to maintain a liquidity facility at all times. The liquidity facility is made up of:



On
any date, the balance of cash and permitted investments in the account with the fiscal agent plus the amount of any acceptable letters of credit must be at least equal to the sum of
the next payment of scheduled debt service for all debt agreements under which we have indebtedness outstanding.

We
shall deposit, or shall cause to be deposited, with the fiscal agent no later than 10 a.m., New York time, on each business day the amount necessary to ensure that the amount
on deposit is sufficient to pay debt service in respect of our Indebtedness on that business day. If by 10 a.m., New York time, on any business day the funds on deposit with the fiscal agent
are insufficient to pay the debt service due
and payable on that business day, then the fiscal agent shall draw from the liquidity facility, if it is available, an amount equal to the amount of that insufficiency on the same business day.

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Acceptable Letters of Credit

Instead of holding cash or cash equivalents in the liquidity account, we may provide the fiscal agent with one or more acceptable letters of credit which by their
terms require that any drawing on them be deposited in the liquidity account. In this annual report, when we use the term "acceptable letter of credit", we mean an irrevocable letter of credit that
has been issued to and for the benefit of the fiscal agent for the account of someone other than us. In order to be an acceptable letter of credit, a letter of credit:



After
we deliver one or more acceptable letters of credit to the fiscal agent, if the amount held in the liquidity facility is greater than the aggregate amount of the next payment of
scheduled debt service for all debt agreements under which we have debt outstanding, the fiscal agent shall release to us, if available in the liquidity account, an aggregate amount of cash (and, if
necessary, liquidate investments held in the liquidity account) necessary to reduce the amount of the liquidity facility to the aggregate amount of the next payment of scheduled debt service for all
debt agreements under which we have debt outstanding. The fiscal agent shall return any acceptable letter of credit to us or as we direct upon the deposit by a person or entity, other than us, of cash
or cash equivalents into the liquidity account available to be drawn by the fiscal agent under that acceptable letter of credit for deposit in the liquidity account. Unless the fiscal agent receives
written notice from the issuer of any acceptable letter of credit at least 5 days prior to the date of expiration of the letter of credit that it has been renewed, the fiscal agent shall draw
the full amount available thereunder and deposit the amount paid pursuant to such drawing in the liquidity account.

Payment of Accelerated Debt Service

Each of our debt agreements shall expressly provide, and each holder of our Indebtedness upon becoming a holder shall be deemed to agree, that



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However,
that agreement shall automatically cease to have any force and effect upon the occurrence and during the continuance of:



Nonetheless,
the right of any person to enforce the receivables purchase agreement, the servicing and collection agency agreement, the letter agreement and each designated customer
notice against any party thereto or to exercise any right thereunder shall not be limited.

Funding and Administration of Retention Account

Under the fiscal agency agreement, we have established and are required to maintain an account with the fiscal agent designated as the "retention account".

The
provisions of the fiscal agency agreement governing the retention account are only triggered when we receive one or the other of certain notices from holders of our indebtedness,
called the "Specific Event Notice" and the "Acceleration Notice", and while this notice remains in effect. For a more complete discussion of what we mean by these terms, see "Glossary of Certain
Defined Terms Used Primarily Under the Captions "Description of Principal Agreements,' "Description of the Indenture' and "Description of the Insurance Documents."'

On
each business day during a period when a Specified Event Notice and/or an Acceleration Notice is in effect, we, or the fiscal agent on our behalf, have agreed to instruct all
collection agents to transfer, to the extent available in the collection account, amounts to the retention account as follows:



In
addition, an event of default in any debt agreement which, under the terms of that debt agreement, triggers a diversion of 100% of collections to the retention account, will also
result in the retention of 100% of collections under the fiscal agency agreement.

Any
amounts on deposit in the retention account on any business day shall be applied to pay accelerated debt service, if any, that is due and payable on that day. While a Specified Event
Notice is in effect but no Acceleration Notice is in effect, we agree to maintain in the retention account at all times an amount at least equal to the aggregate amount of funds required to be
transferred from all collection accounts to the retention account following the delivery of the Specified Event Notice. All such payments shall be paid to holders of Indebtedness in proportion to
amounts of accelerated debt service due and unpaid to them. Pending distribution to holders of Indebtedness, amounts held in the retention account shall be invested by the fiscal agent in permitted
investments as directed by us or someone we appoint.

The
collection agent will continue to transfer funds to the collection account until it receives a notice from the fiscal agent to cease doing so.

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Investment of Funds in Liquidity Account and Retention Account

We, or the investment manager on our behalf, shall instruct the fiscal agent as to the investment of funds (or variation or redemption of such investments) in the
liquidity account and the retention account on our behalf. However, (1) such investments must only be in permitted investments and (2) for purposes of the liquidity account, such
investments must have final maturities consistent with ensuring that sufficient cash to pay the next payment of scheduled debt service for each of our outstanding debt agreements is available in the
liquidity account.

The Servicing and Collection Agency Agreement

The servicing and collection agency agreement governs the treatment and allocation of collections upon the receivables. In this annual report, when we say
"collection", we mean all amounts received from the designated customers on the purchased receivables when due in the form of cash, checks, wire transfers or any other form of cash payment. The term
also includes:



Under
the servicing and collection agency agreement, UBS AG was appointed to act as the initial collection agent and PMI was appointed to act as the servicer. On October 1, 1999,
Standard Chartered Bank replaced UBS AG as collection agent, in accordance with the terms of the servicing and collection agency agreement. Standard Chartered Bank is one of a number of banks with
which PMI and Petróleos Mexicanos maintain ordinary banking relationships. When we use the term "collection agent" in this annual report, we mean it to include not only Standard
Chartered Bank, but also any of Standard Chartered Bank's successors appointed in accordance with the servicing and collection agency agreement. Likewise, when we use the term "servicer", we intend it
to include not only PMI, but also any of PMI's successors appointed in accordance with that agreement.

The Collection Account

The collection account is an account established in the name of PMI, PMI Services, and us, which is administered by the collection agent. The designated customers
make their payments for crude oil they purchase from PMI into the account, regardless of whether they are buying Maya crude oil or another type of crude oil. In accordance with instructions provided
by the servicer, the collection agent allocates the funds held in the collection account to us, PMI Services, PMI, or the retention account, as described below.

Duties of the Collection Agent

The primary responsibility of the collection agent is to transfer payments on each receivable which have been paid into the collection account to the owner of
that receivable. Because the designated customers make all their payments, not just those on the purchased receivables, into the account, the collection agent has to allocate the funds between PMI,
PMI Services and us. No distribution of collections to us, PMI or PMI Services will be considered definitive until the servicer, relying on information supplied by PMI and the designated customers,

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determines
the proper allocation of each collection. We, PMI and PMI Services have agreed to return any over-payments made to us. Each collection agent will transfer funds corresponding to
our interest in any collection account that we, PMI Services and PMI maintain with it within one business day of receiving transfer instructions from the servicer. However, the collection agent will
not follow the servicer's instructions to transfer funds if the fiscal agent has instructed it to instead transfer funds to the retention account, as described in "The Fiscal Agency
AgreementFunding and Administration of Retention Account".

The
collection agent will also deliver a report to the servicer on each business day on which it receives collections in its collection account, indicating the amount of collections
deposited. The collection agent will invest any amounts remaining in its collection account overnight on our behalf, as Petróleos Mexicanos, acting as investment manager, instructs. The
collection agent has no obligation to any party to make inquiries about the performance of any party under the receivables purchase agreement and the servicing and collection agency agreement. It also
has no obligation to inspect the books, properties or records of the servicer.

We,
PMI and PMI Services will pay the collection agent reasonable and documented fees and reimburse the collection agents for their reasonable and documented expenses in connection with
the performance of their obligations. A collection agent may resign by giving at least 90 days notice. In addition, either PMI or we may remove a collection agent:



A
collection agent must be (1) a bank or trust company organized under the laws of the United States or any state of the United States or (2) the branch of a foreign bank,
in each case having an office located in New York City. In addition, each collection agent must meet minimum financial standards specified in the servicing and collection agency agreement.

Duties of the Servicer

The servicer manages, services, administers and collects any receivables of designated customers that have been sold by PMI to PMI Services and thereafter to us.
The servicer has full power and authority to do all things necessary to complete these duties, including the defense of our right, title and interest, and, if applicable, the right, title and interest
of PMI and PMI Services, to the receivables and collections upon those receivables. The servicer has agreed to take all commercially reasonable steps to collect, and hold any collections it may
receive in trust, for the benefit of PMI, PMI Services or us. The servicer covenants:



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We,
PMI Services and, in the event that PMI ceases to be the servicer, PMI will pay the servicer reasonable and documented fees and reimburse the servicer for its reasonable and
documented expenses in connection with the performance of its obligations. We may remove PMI as servicer if:



If
a successor has been appointed we may remove any successor servicer at any time.

Representations and Warranties

Each of PMI and PMI Services represents, among other things, that neither the execution, delivery nor performance by it of the servicing and collection agency
agreement:



PMI
has also agreed to:



Governing Law, Jurisdiction and Waiver of Immunity

The servicing and collection agency agreement is governed by and interpreted in accordance with the laws of the State of New York, with the following exceptions:



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We
and Petróleos Mexicanos have appointed the Consul General of Mexico in New York City and his successors as our process agent. PMI and PMI Services have appointed
Curtis, Mallet-Prevost, Colt and Mosle acting through their office in New York as their process agent. This means that process may be served on these agents in any action based upon the servicing and
collection agency agreement upon whom process may be served in any action based upon the agreement which may be instituted in the Supreme Court of the State of New York, County of New York, any
federal court sitting in the Borough of Manhattan, The City of New York and any appellate court or body thereto. We, Petróleos Mexicanos, PMI and PMI Services have each:



Petróleos
Mexicanos and PMI have reserved the right to plead sovereign immunity under the Immunities Act with respect to actions brought against them under United States
federal securities laws or any state securities laws, and each of Petróleos Mexicanos' and PMI's appointment of the applicable process agent as its agent for service of process will not
extend to these actions. In the absence of this waiver of immunity by Petróleos Mexicanos it would not be possible to obtain a judgment in an action brought
in a United States court against Petróleos Mexicanos, unless such court were to determine that Petróleos Mexicanos is not entitled under the Immunities Act to sovereign
immunity with respect to that action. The same is true of PMI. Even if a United States judgment could be obtained in any such action under the Immunities Act, it may not be possible to obtain in
Mexico a judgment based on such a United States judgment. Moreover, execution upon property that Petróleos Mexicanos may have in the United States to enforce a judgment obtained under
the Immunities Act may not be possible except under the limited circumstances specified in the Immunities Act.

Article 27
of the Political Constitution of the United Mexican States, Articles 16 and 60 of the General Law on National Patrimony (and other related articles), Articles 1, 2, 3,
4 (and related articles) of the Regulatory Law, Articles 15, 16 and 19 of the Regulations to the Regulatory Law, Articles 1, 2, 3, 4 (and other related articles) of the Organic Law of
Petróleos Mexicanos and Subsidiary Entities and Article 4 of the Federal Code of Civil Procedures of Mexico establish, among other things, that:



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As
a result, notwithstanding Petróleos Mexicanos' waiver of immunity described in the preceding paragraph, a Mexican court may not enforce a judgment against Petróleos
Mexicanos by ordering the attachment of its assets.

The Letter Agreement

Petróleos Mexicanos has agreed with us in the Letter Agreement to cause PEP, PMI and PMI Services to comply with their material obligations under
the receivables purchase agreement and the crude oil sale agreement governing the sale of crude oil by PEP to PMI. In the letter agreement, Petróleos Mexicanos makes representations and
warranties as to:



However,
none of Petróleos Mexicanos, PEP, PMI, PMI Services, Petróleos Mexicanos' other Subsidiaries or Affiliates or Mexico:



Governing Law, Jurisdiction and Waiver of Immunity

In the letter agreement, Petróleos Mexicanos has appointed the Consul General of Mexico in New York City and his successors as process agent upon
whom process may be served in any action based upon the letter agreement which may be instituted in any federal court sitting in the Borough of Manhattan, The City of New York and any appellate court
or body thereto. Petróleos Mexicanos has:



Petróleos
Mexicanos reserves the right to plead sovereign immunity under the Immunities Act with respect to actions brought against it under United States federal
securities laws or any state securities laws. Further, Petróleos Mexicanos' appointment of the process agent as its agent for service of process will not extend to such actions. In the
absence of a waiver of immunity by Petróleos Mexicanos with respect to such actions, it would not be possible to obtain a judgment in an action brought in a United States court against
Petróleos Mexicanos unless such court were to determine that Petróleos Mexicanos is not entitled under the Immunities Act to sovereign immunity with respect to such
action. However, even if a United States judgment could be obtained in any such action under the Immunities Act, it may not be possible to obtain in Mexico a judgment based on such a United States
judgment. Moreover, execution upon property of Petróleos Mexicanos located in the United States to enforce a
judgment obtained under the Immunities Act may not be possible except under the limited circumstances specified in the Immunities Act.

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Article 27 of the Political Constitution of the United Mexican States, Articles 16 and 60 of the General Law on National Patrimony (and other related articles), Articles 1, 2, 3,
4 (and related articles) of the Regulatory Law, Articles 15, 16 and 19 of the Regulations to the Regulatory Law, Articles 1, 2, 3, 4 (and other related articles) of the Organic Law of
Petróleos Mexicanos and Subsidiary Entities and Article 4 of the Federal Code of Civil Procedures of Mexico establish, among other things, that:



As
a result, notwithstanding Petróleos Mexicanos' waiver of immunity described in the preceding paragraph, a Mexican court may not enforce a judgment against Petróleos
Mexicanos by ordering the attachment of its assets.

DESCRIPTION OF THE INDENTURE

We entered into the senior indenture, dated as of December 1, 1998, between ourselves and The Chase Manhattan Bank, which serves as trustee. The senior
indenture provides the framework under which we may issue debt securities from time to time in one or more series. Each series of our Notes was issued under the senior indenture, in each case as
supplemented by a supplemental indenture, as follows:

|Series of Note       |  | Principal
Amount |  | Final
Maturity    |  | Supplemental Indenture                                                                                                        
|-------------------- |  | ---------------- |  | ----------------- |  | ------------------------------------------------------------------------------------------------------------------------------
|1998 notes           |  |                  |  |                   |  |                                                                                                                               
|5.72% notes due 2003 |  | U.S.$500,000,000 |  | November 15, 2003 |  | First 5.72% Note Supplemental Indenture between Pemex Finance, MBIA, the Fiscal Agent and the Trustee, dated December 1, 1998 
|8.02% notes due 2007 |  | U.S.$350,000,000 |  | May 15, 2007      |  | First 8.02% Note Supplemental Indenture between Pemex Finance and the Trustee, dated December 1, 1998                         
|6.30% notes due 2010 |  | U.S.$400,000,000 |  | May 15, 2010      |  | First 6.30% Note Supplemental Indenture between Pemex Finance, Ambac, the Fiscal Agent and the Trustee, dated December 1, 1998
|9.15% notes due 2018 |  | U.S.$250,000,000 |  | November 15, 2018 |  | First 9.15% Note Supplemental Indenture between Pemex Finance and the Trustee, dated December 1, 1998                         
|                     |  |                  |  |                   |  |                                                                                                                               

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|February 1999 notes               |  |                  |  |                   |  |                                                                                                                                  
|--------------------------------- |  | ---------------- |  | ----------------- |  | ---------------------------------------------------------------------------------------------------------------------------------
|6.125% notes due 2003             |  | U.S.$300,000,000 |  | November 15, 2003 |  | Second 6.125% Note Supplemental Indenture between Pemex Finance, MBIA, the Fiscal Agent and the Trustee, dated February 25, 1999 
|8.450% notes due 2007             |  | U.S.$200,000,000 |  | February 15, 2007 |  | Second 8.450% Note Supplemental Indenture between Pemex Finance and the Trustee, dated February 25, 1999                         
|6.550% notes due 2008             |  | U.S.$300,000,000 |  | February 15, 2008 |  | Second 6.550% Note Supplemental Indenture between Pemex Finance, Ambac, the Fiscal Agent and the Trustee, dated February 25, 1999
|8.875% notes due 2010             |  | U.S.$200,000,000 |  | November 15, 2010 |  | Second 8.875% Note Supplemental Indenture between Pemex Finance and the Trustee, dated February 25, 1999                         
|February 1999 floating rate notes |  |                  |  |                  
|Series A floating rate notes      |  | U.S.$100,000,000 |  | February 15, 2014 |  | Floating Rate Notes, Series A, Supplemental Indenture between Pemex Finance and the Trustee, dated as of February 25, 1999       
|July 1999 notes                   |  |                  |  |                   |  |                                                                                                                                  
|9.14% notes due 2004              |  | U.S.$225,000,000 |  | August 15, 2004   |  | Third 9.14% Note Supplemental Indenture between Pemex Finance and the Trustee, dated July 27, 1999                               
|9.69% notes due 2009              |  | U.S.$600,000,000 |  | August 15, 2009   |  | Third 9.69% Note Supplemental Indenture between Pemex Finance and the Trustee, dated July 27, 1999                               
|7.33% notes due 2012              |  | U.S.$250,000,000 |  | May 15, 2012      |  | Third 7.33% Note Supplemental Indenture between Pemex Finance, MBIA, the Fiscal Agent and the Trustee, dated July 27, 1999       
|10.61% notes due 2017             |  | U.S.$200,000,000 |  | August 15, 2017   |  | Third 10.61% Note Supplemental Indenture between Pemex Finance and the Trustee, dated July 27, 1999                              
|July 1999 Additional Issuances    |  |                  |  |                  
|9.22% notes due 2004              |  | U.S.$50,000,000  |  | May 15, 2004      |  | 9.22% Note Supplemental Indenture between Pemex Finance and the Trustee, dated July 27, 1999                                     
|Series B floating rate notes      |  | U.S.$90,000,000  |  | February 15, 2014 |  | Floating Rate Notes, Series B, Supplemental Indenture between Pemex Finance and the Trustee, dated July 27, 1999                 
|Series C floating rate notes      |  | U.S.$35,000,000  |  | August 18, 2004   |  | Floating Rate Notes, Series C, Supplemental Indenture between Pemex Finance and the Trustee, dated July 27, 1999                 
|                                  |  |                  |  |                   |  |                                                                                                                                  
|                                  |  |                  |  |                   |  |                                                                                                                                  

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|February 2000 notes  |  |                  |  |                   |  |                                                                                                                               
|-------------------- |  | ---------------- |  | ----------------- |  | ------------------------------------------------------------------------------------------------------------------------------
|9.03% notes due 2011 |  | U.S.$800,000,000 |  | February 15, 2011 |  | Third 9.03% Note Supplemental Indenture between Pemex Finance and the Trustee, dated February 10, 2000                        
|7.80% notes due 2013 |  | U.S.$150,000,000 |  | February 15, 2013 |  | Third 7.80% Note Supplemental Indenture between Pemex Finance, MBIA, the Fiscal Agent and the Trustee, dated February 10, 2000

Our 5.72% notes due 2003, our 6.125% notes due 2003 and our 9.22% notes due 2004 have matured and been paid in full.

We
refer to the senior indenture and supplemental indentures together simply as the "indenture".

The
following is a summary of the material provisions of the indenture. It does not purport to be complete and is subject to the detailed provisions of the senior indenture, which is
included as an exhibit to this annual report, as incorporated in this annual report by reference to the registration statement of Pemex Finance and Petróleos Mexicanos on
Form F-4 dated September 30, 1999 (registration statement no. 333-10920).

Copies
of the supplemental indentures for the Notes are included as exhibits to this annual report as follows:



See
also the section entitled "Glossary of Certain Defined Terms Used Primarily Under the Captions "Description of Principal Agreements,' "Description of the Indenture,' and "Description of the
Insurance Documents,"' where we define the capitalized terms that appear in this annual report. The following summary is subject to, and qualified in its entirety by reference to, all the provisions
of the indenture and the Notes.

General

All notes issued under the senior indenture are or will be our direct, unconditional, senior, unsecured and general obligations. These notes enjoy a right of
payment prior to the payment of all of our existing and future subordinated Indebtedness, and rank equally in right of payment with all of our existing and future unsecured and unsubordinated
Indebtedness. Moreover, the notes rank equally in right of payment among themselves. None of our assets, including for example, the liquidity facility and the retention account, are or will be pledged
or made subject to any lien, encumbrance or security interest in favor of the holders of our notes. Also, the senior indenture permits us to incur additional Indebtedness, subject to some limitations.
As the total amount of our senior debt grows, each holder's share of any distribution in the event of our bankruptcy may be diluted.

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Covenants

In the supplemental indentures, we agree that we will observe and perform each of the covenants set forth in the fiscal agency agreement and the senior indenture,
so long as any amount payable under any of our Notes remains unpaid. The covenants found in both of these agreements are incorporated by reference in each supplemental indenture as if they actually
appeared in each one. For a more
complete explanation of the covenants in the fiscal agency agreement, see "Description of Principal AgreementsThe Fiscal Agency AgreementCovenants".

In
the supplemental indentures for the February 2000 notes, we also agree that so long as any amount payable under any of the February 2000 notes remains unpaid, we will
not incur additional Indebtedness if, after giving effect to that incurrence of additional Indebtedness, the aggregate outstanding principal amount of our senior Indebtedness would exceed
U.S.$7.0 billion, unless Standard & Poor's, Moody's and one of either Duff & Phelps or Fitch confirm the rating of the notes immediately prior to that incurrence of additional
Indebtedness.

In
addition, we agree in the indenture to deliver to the trustee unaudited quarterly financial statements within 60 days after the last day of the first three fiscal quarters of
each fiscal year, and annual audited financial statements within 120 days after the last day of each fiscal year, together with a certificate of an authorized officer stating that no event of
default has occurred and is then continuing or, if an event of default has occurred and is continuing, stating such fact and including a description of the nature of such event of default and the
actions that we or any other person propose to take with respect thereto.

Events of Default

Under the senior indenture, the following events constitute an "event of default" with respect to any series of notes:



If
we and the fiscal agent receive an Acceleration Notice stating that an event of default listed under paragraphs (a), (b), (e), (f), (g), or (h) above has occurred, then the
collection agent will send 100% of the

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collections
on the purchased receivables that we would otherwise receive into our collection account to the retention account instead. As described more fully in the "Description of
Principal AgreementsThe Fiscal Agency AgreementFunding and Administration of the Retention Account", the retention account is a separate account established with the fiscal
agent which is maintained for the benefit of holders of our Indebtedness who are entitled to receive accelerated payments of principal or interest on that Indebtedness. If any of the events of default
described above occurs and is continuing, the holders of the notes shall have, subject to the terms and conditions of the indenture, and in addition to all other available remedies at law and in
equity, each
of the remedies set forth in the indenture. See "Description of Principal AgreementsThe Fiscal Agency AgreementEvents of Default".



If an event of default occurs and continues with respect to any series of Notes, the trustee has the power to take some actions on behalf of the holders of the
Notes. Specifically, the trustee will declare that all principal and interest due from us under a series of Notes will become due and payable:



If
the event of default described under paragraph (c) above occurs, acceleration of payments of principal and interest will be automatic, regardless of what action the trustee takes or fails to
take.

If
we meet specific conditions, the holders of a majority in principal amount of the Notes of the affected series then outstanding may annul the trustee's declaration of acceleration of
payments and waive past events of default. However, the holders may not waive an event of default under any circumstances if it is a continuing failure to pay principal, premium or interest on the
Notes.

However,
each holder's and, if applicable, each insurer's right to receive accelerated payment of principal and interest may be limited in some respects. See "Description of
Principal AgreementsThe Fiscal Agency AgreementPayment of Accelerated Debt Service".

Control by the Series Controlling Party

MBIA and Ambac, as insurers, have the right to control some of the actions taken by the trustee in connection with each series of Notes that they insure. We
consider each insurer as the "series controlling party" for each series of Notes that it insures. However, if a note insurance policy default is in effect with respect to a series of insured Notes, as
described below in "Concerning the Insurer", the insurer will not be the series controlling party for that series. Rather, the holders of the percentage of outstanding aggregate principal
amount of the Notes of that series specified in the indenture will be the series controlling party for that series. The series controlling party for the series of uninsured Notes will be the holders
of the percentage of outstanding aggregate principal amount of the Notes of that series specified in the indenture.

In
general, at any time that the insurer is the series controlling party of a series of Notes, that insurer has the right to direct the trustee for that series with respect to all
matters concerning:



However,
the insurer will not have these rights if:

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In
addition, the trustee may take any other action that it deems proper which is not inconsistent with the insurer's direction.

The
series controlling party of any series of Notes may waive any past event of default and its consequences under the indenture or any similar occurrence under any other document
governing the transactions described in this annual report, on behalf of the holders of Notes of that series, except a default:



In
the event that any waiver becomes effective under the documents governing the transactions described in this annual report, we, the trustee and the holders of the Notes will be
restored to our former positions and rights under those transaction documents as we would have had if the event of default had not occurred. In addition, the relevant event of default will cease to
exist and be deemed to have been cured and not to have occurred for every relevant purpose under any transaction document. However, that waiver will not extend to any subsequent or other event of
default or impair any related right.

In
addition, the series controlling party of any series of Notes will have the right to consent or to withhold its consent, and to direct the trustee to consent or withhold its consent,
to any modifications of any of the documents governing the transactions described in this annual report, on behalf of all of the holders of Notes of that series. Those holders will not have the right
to:



However,
the consent of each of the holders of Notes of each series affected by the modification will be required to approve any modification which will:



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Modification of the Indenture

There are three types of changes we can make to the indenture and the Notes.



First, we and the trustee may enter into supplemental indentures without the consent of the holders of the Notes to:



Second, if we have the consent of the holders of at least a majority in the aggregate principal amount of our notes, including the Notes of all series then
outstanding and affected (voting as one class), the indenture also allows the trustee and us to:





Third, there are changes that we cannot make without the approval of each holder of an outstanding note, including any Note, affected by the change. The following
lists those types of changes:



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For
additional provisions regarding modification of the indenture that apply to holders of insured Notes, see "Control by the Series Controlling Party" above.

Governing Law; Waiver of Immunity

The Notes and the indenture are governed by and interpreted in accordance with the laws of the State of New York, except that the laws of the Cayman Islands
govern our authorization and execution of these documents.

We
have appointed the Consul General of Mexico in New York City and his successors as our process agent for accepting service of legal process. Process may be served with the process
agent in any action based upon the Notes which may be instituted in the Supreme Court of the State of New York, County of New York, any federal court in the Borough of Manhattan, The City of New York
and any appellate court or body of those courts.

We
have irrevocably submitted to the jurisdiction of any of the above listed courts in respect of any action based upon the Notes. We have irrevocably waived, to the fullest extent
permitted by law, any objection which we may now have or may have in the future to the choice of venue of any legal action in any of these courts. Also, we have waived any right to which we may be
entitled on account of residence or domicile. In any action based upon the Notes in any federal court in the Borough of Manhattan, The City of New York or in any competent court in Mexico we have
waived irrevocably any immunity from jurisdiction to which we might otherwise be entitled, including, to the extent applicable:



Redemption

Neither holders of the Notes, nor the trustee, nor any other person can require us to repurchase the Notes or make mandatory redemption or sinking fund payments
on the Notes. The Notes of any series may be redeemable, in whole or in part, at our option, in accordance with the terms of the relevant supplemental indenture.

Concerning the Insurer

MBIA issued and delivered to the trustee a financial guaranty insurance policy for the benefit of the holders of each of the four series of notes which it
insures. Similarly, Ambac issued and delivered to the trustee a financial guaranty insurance policy for the benefit of the holders of the two series of notes which it insures. We refer to these
policies as the "note insurance policies". Under each note insurance policy, MBIA, or Ambac, as applicable, unconditionally and irrevocably guarantees full, complete and timely payment of such series
of Notes as described in "Description of the Insurance Documents". MBIA and Ambac, as applicable, have certain rights specified in the indenture.



In addition to its rights as a subrogee described below and contained in the relevant insurance agreement described below in "Description of the
Insurance Documents", the relevant insurer has, with some exceptions, and with respect to the series of Notes for which it is the insurer:

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Under
the indenture, the trustee acknowledges that:



These
payments will be made in the manner provided in the indenture.

The
indenture provides that, as long as no note insurance policy default exists with respect to the relevant insurer, as described below, the trustee will act upon any written direction
by that insurer with respect to the series of insured Notes for action to preserve or enforce that insurer's (and/or the relevant holders') rights or interests, as applicable, under the indenture.



A "note insurance policy default" means, with respect to the relevant insurer and the related note insurance policy and series of Notes, that any one of the
following events shall have occurred and be continuing:



Each default specified under "Description of the Insurance DocumentsThe Insurance AgreementDefault" shall be deemed to
constitute a specified event under the fiscal agency agreement, as described in "Description of Principal AgreementsThe Fiscal Agency AgreementSpecified Events".

With
respect to a series of Notes for which it is the insurer, the insurer is entitled to deliver a Specified Event Notice upon the occurrence of any default under the insurance
agreement. In the case of a claim under the

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note
insurance policy, the insurer is also entitled to deliver an Acceleration Notice. See "Description of the Insurance DocumentsThe Insurance
AgreementDefault".

DESCRIPTION OF THE INSURANCE DOCUMENTS

Each of the two outstanding note insurance policies issued by MBIA and two insurance policies issued by Ambac set forth the insurer's responsibilities to make
specified payments in respect of the insured Notes in the event that we fail to make our payment obligations to holders of the insured Notes. In addition, in connection with each series of insured
Notes we and MBIA or Ambac, as applicable, entered into an insurance and reimbursement agreement. We refer to these agreements as the "insurance agreements". In each of these agreements, we agreed to
reimburse, with interest, the relevant insurer for amounts it paid for claims made under its note insurance policy. Each also sets forth the insurer's rights with respect to the relevant series of
insured Notes. We refer to the note insurance policies and insurance agreements together as the "insurance documents".

The
following are summaries of some of the provisions of the insurance documents. Such summaries are subject to, and are qualified in their entirety by reference to, all of the
provisions of the insurance documents, including definitions of certain terms. Copies of the insurance documents for the Notes are included as exhibits to this annual report as follows:



Copies
of these agreements are also available for inspection at the principal office of the fiscal agent in the City of New York, which is presently located at JP Morgan Chase, Capital Markets
Fiduciary Services, 450 West 33rd Street, 15th Floor, New York, New York 10001. See also the section entitled "Glossary of Certain Defined Terms Used Primarily Under the Captions "Description of the
Principal Agreements,' "Description of the Indenture,' and "Description of the Insurance Documents"' where we define the capitalized terms that appear in this annual report.

The Note Insurance Policies

Under each note insurance policy, the insurer unconditionally and irrevocably guarantees full, complete and timely payment of:



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The
trustee shall hold each note insurance policy in trust for the holders of the insured Notes. The trustee will apply all proceeds of each note insurance policy to make payments of
accrued and unpaid interest and additional amounts due on any payment date with respect to the relevant series of insured Notes, if the aggregate amount of funds



is
insufficient to pay the scheduled interest payment and the originally scheduled principal payment due and payable on that date. The trustee will maintain a complete and accurate record of all funds
deposited by the insurer into the relevant payment accounts and the allocation of those funds to payments on the applicable series of Notes.

By
accepting an insured note, each holder of an insured note acknowledged that it must comply with the applicable terms of the note insurance policy in order for the trustee to receive
payment from the insurer in respect of amounts which that holder may be entitled to under the note insurance policy, including but not limited to avoided payments, as described below.



If insured Notes become subject to mandatory redemption and insufficient funds are available for redemption of all outstanding insured Notes of that series, the
insurer will remain obligated to pay:



In
the event of any acceleration of the outstanding principal amount of the series of insured Notes, the guaranteed payments under the note insurance policy will be made at such times
and in such amounts as would have been made had there not been an acceleration. There is no right under the note insurance policy to unilaterally accelerate guaranteed payments.



The note insurance policies do not insure any risk other than nonpayment of originally scheduled principal, interest and additional amounts due and payable under
the relevant series of insured Notes.

The
note insurance policies are not covered by the property/casualty insurance security fund specified in Article 76 of the New York Insurance Law.



The note insurance policies and the obligations of the insurer under those policies will terminate upon the expiration of the term of the relevant note insurance
policy. The "term of the note insurance policy" means the period from and including the date of issuance of the note insurance policy to and including the later to occur of:



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However,
if an insolvency proceeding by or against us exists during that period, then the note insurance policy and the insurer's obligations under that policy will terminate on the date
of the conclusion or dismissal of that insolvency proceeding without continuing jurisdiction by the court. Further, if the holders of insured Notes are required to return any avoided payment as a
result of that insolvency proceeding, then the relevant note insurance policy will terminate on the date on which the insurer, through its insurer fiscal agent, has made all payments required to be
made under the terms of that note insurance policy in respect of all avoided payments.

The Insurance Agreement



A default by us under an insurance agreement will allow the applicable insurer, among other things, to send a Specified Event Notice or, in the case of a default
of the type specified in clause (3) of the next sentence, an Acceleration Notice, to us and the fiscal agent in accordance with the fiscal agency agreement. A default under the insurance
agreement includes, among other events:



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GLOSSARY OF CERTAIN DEFINED TERMS USED PRIMARILY UNDER THE  CAPTIONS "DESCRIPTION OF PRINCIPAL AGREEMENTS", "DESCRIPTION OF  THE INDENTURE", AND "DESCRIPTION OF THE INSURANCE DOCUMENTS"

This
glossary sets forth the definitions of capitalized terms used under the captions "Description of Principal Agreements", "Description of the Indenture", and "Description of the
Insurance Documents". Terms not defined in this glossary are used as defined in such sections or elsewhere in this annual report.

"Acceleration Notice" means a written notice to us and the fiscal agent from any holder of our Indebtedness (or any trustee for or agent
or other representative of such holder) or insurer with respect to such Indebtedness stating that the stated maturity date of such Indebtedness has been accelerated (or, in the case of an insurer, the
reimbursement obligation has been declared to be due and payable) and providing the basis for such notice and that such notice constitutes an "Acceleration Notice" for purposes of the fiscal agency
agreement. If the debt agreement under which that Indebtedness is issued and outstanding contains specific procedures, conditions or requirements for the giving of an "Acceleration Notice" thereunder,
then no such notice shall constitute an "Acceleration Notice" unless such procedures, conditions or requirements have been complied with.

"Affiliate" for purposes of the receivables purchase agreement, as to any person means



For
purposes of this definition, "control" of a person means the power, directly or indirectly, either to



"Control" (including, with correlative meanings the terms "Controlling", "Controlled by" and "under common Control with"), as applied to
any person, means the possession by another person (whether directly or indirectly and whether by the ownership of share capital, the possession of voting power, by contract or otherwise) of the power
to appoint and/or remove the majority of the members of the board of directors or other governing body of that person or otherwise to direct or cause the direction of the affairs and policies of that
person.

"Equity" means our total paid-in capital, retained earnings and reserves and the outstanding principal amount of any capital
provided to us in the form of subordinated debt which is subordinated in accordance with the terms of the fiscal agency agreement.

"Guarantee" means any obligation, contingent or otherwise, by any person guaranteeing or having the economic effect of guaranteeing any
Indebtedness of any other person (the "primary obligor") in any manner, whether directly or indirectly, and including, without limitation, any lien on the assets of such person securing obligations of
the primary obligor and any obligation of such person (1) to purchase or pay (or advance or supply funds for the purchase or payment of) that Indebtedness or to purchase (or advance or supply
funds for the purchase of) any security for the payment of that Indebtedness, (2) to purchase property, securities or services for the purpose of assuring the holder of that Indebtedness of the
payment of that Indebtedness or (3) to maintain working capital, equity capital or other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to
pay that Indebtedness (and "Guaranteed", "Guaranteeing" and "Guarantor" shall have meanings correlative to the foregoing). A Guarantee by any person shall not include endorsements by that person for
collection or deposit, in either case, in the ordinary course of business.

"Indebtedness" means at any time (without duplication), with respect to any person, whether recourse is to all or a portion of the assets
of such person, and whether or not contingent,

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"Issuer Notice" means a written notice to us from any holder of our Indebtedness (or any trustee for or agent or the representative of
such holder) stating that such notice constitutes an "Issuer Notice" for purposes of the fiscal agency agreement. If the debt agreement pursuant to which that Indebtedness is issued and outstanding
contains specific procedures, conditions or requirements for the giving of an "Issuer Notice" thereunder, then no such notice shall constitute an "Issuer Notice" unless such procedures, conditions or
requirements have been complied with.

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"Material Adverse Effect" means:



"Rating Decline" means the occurrence on, or within three months after, the date of the occurrence of a change of control, as described in
"Description of Principal AgreementsThe Fiscal Agency AgreementEvents of Default", of any of the following events: (a) in the event any of our
Indebtedness is rated by any rating agency that has rated that Indebtedness at our request on that date on which a change of control occurs as investment grade, the rating category of that
Indebtedness by any rating agency shall be decreased below investment grade as a result of that change of control, (b) in the event any Indebtedness is rated by any, but not all, of the rating
agencies on that date on which a change of control occurs as investment grade, the rating category of that Indebtedness by such rating agency shall be decreased below investment grade as a result of
that change of control, or (c) in the event any Indebtedness is rated below investment grade by all rating agencies that have rated that Indebtedness at our request on the date on which a
change of control occurs, the rating category of such Indebtedness by any rating agency shall be decreased by one or more gradations as a result of that change of control.

For
the purposes of this definition, "rating category" means:



In
determining whether the rating category of any series of notes has decreased by one or more gradations, gradations within rating categories (1, 2 and 3 for Moody's, "+" or
"" for Standard & Poor's or the equivalent gradations for another rating agency) shall be taken into account (e.g., with respect to Moody's, a decline in a rating from Aa2 to Aa3,
will constitute a decrease of one gradation). A rating category is "investment grade" if it is:



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"Specified Event Notice" means a written notice to us and the fiscal agent from any holder of our Indebtedness (or any trustee for or
agent or other representative of such holder) or insurer with respect to that Indebtedness stating that a specified event has occurred and is continuing, identifying that specified event and stating
that such notice constitutes a "Specified Event Notice" for purposes of the fiscal agency agreement. If the debt agreement under which that Indebtedness is issued and outstanding contains specific
procedures, conditions or requirements for the giving of a Specified Event
Notice thereunder then no such notice shall constitute a "Specified Event Notice" unless such procedures, conditions or requirements have been complied with.

"Subsidiary" means, as to any person,



76

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Item 5.    Operating and Financial Review and Prospects.

MANAGEMENT'S DISCUSSION AND ANALYSIS  OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our audited financial statements as well as PEMEX's consolidated financial statements in the annual
report of Petróleos Mexicanos for the year ended December 31, 2002, which is incorporated herein by reference.

Overview

Pemex Finance is a special purpose financing vehicle. We were formed as part of a program established to finance PEMEX's capital expenditures. Our business
consists of:



Our
ability to meet our obligations in respect of our outstanding Indebtedness, including the Notes, depends on a number of variables, including:



See
"Item 4. Information on the CompanyDescription of BusinessPEMEX's Customers and Receivables".

The
market for crude oil is subject to price volatility and our business and financial condition depend to a large degree on the international prices for crude oil. Historically, the
monthly weighted average price of the crude oil that PEMEX exports has fluctuated from a ten-year low of U.S.$7.67 per barrel in December 1998 to a high of U.S.$27.73 per barrel in
September 2000. On June 25, 2004, the weighted average spot price of PEMEX crude oil was U.S.$29.20 per barrel.

PEMEX's
crude oil exports to the designated customers are largely comprised of Maya crude oil, which is particularly vulnerable to fluctuations in international crude oil prices. Because
Maya crude oil is a heavy sour crude oil with a smaller, more concentrated market, it is more susceptible to drops in international crude oil demand. In addition, when prices of lighter crude oils
decrease, Maya crude oil becomes less competitive because it costs more to refine it.

In
addition, Mexico is the sole owner of PEMEX and the Mexican Government closely regulates and supervises its operations. Mexican Government intervention could have an adverse effect on
the operations of PEMEX, PEP or PMI, which could in turn affect our ability to operate. For instance, if the Mexican Government were to cause PEP to reduce production or limit future capital
expenditures, this could reduce PMI's ability to generate the necessary flow of receivables to support our payments under our indebtedness.

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The
length of the period from the date on which we transfer to PMI Services and PMI Services transfers to PMI the purchase price for a future eligible receivable to the date on which
that receivable is generated is directly related to:



The
receivables purchase agreement does not create any requirements for volumes of crude oil exports. Designated customers are generally required to make full payment on standard
30 day payment terms.

An
increase in international prices for crude oil which is not offset by a decrease in the frequency of shipments and/or in the volume of crude oil sold to designated customers will
reduce the length of the period between our payment of the purchase price for an eligible receivable and our recovery of these funds through payments by the designated customers. Conversely, a
decrease in international prices for crude oil which is not offset by an increase in the frequency of shipments and/or the volume of crude oil sold to designated customers will increase the length of
the period between our payment of the
purchase price for the eligible receivable and our recovery of these funds through payments by the designated customers.



The Cayman Islands currently impose no income, corporation or capital gains tax and no estate duty, inheritance tax or gift tax. The only government charge
payable by us in the Cayman Islands is an annual registration fee of U.S.$573.17 calculated on the basis of the nominal amount of our authorized share capital. A stamp duty will be payable on certain
documents that are executed in or brought to the Cayman Islands.



The U.S. dollar is our functional currency and most of our transactions are denominated in U.S. dollars.

The
following discussion refers to amounts stated on the basis of IAS and should be read in conjunction with the audited financial statements included elsewhere in this annual report.
Although there are a number of differences between IAS and U.S. GAAP, for the period from November 18, 1998 (the date of inception) through December 31, 1998 and the years ended
December 31, 1999, 2000, 2001, 2002 and 2003, application of U.S. GAAP would not have produced differences with respect to our shareholders' equity and net income.

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The
following table summarizes our firm commitments on December 31, 2003 and the timing and effect that such obligations are expected to have on our liquidity and cash flow in
future periods. We have no other commercial commitments.

|                              |                                   | Principal Payments Due by Period
|----------------------------- | --------------------------------- | --------------------------------
|
|
|Long-term Debt                |                                   |                                 
|                              | 1998 notes                        |                                 
|                              | 8.02% notes due 2007              |                                 
|                              | 6.30% notes due 2010              |                                 
|                              | 9.15% notes due 2018              |                                 
|                              | February 1999 notes               |                                 
|                              | 8.45% notes due 2007              |                                 
|                              | 6.55% notes due 2008              |                                 
|                              | 8.875% notes due 2010             |                                 
|                              | February 1999 floating rate notes |                                 
|                              | Series A floating rate notes      |                                 
|                              | July 1999 notes                   |                                 
|                              | 9.14% notes due 2004              |                                 
|                              | 9.69% notes due 2009              |                                 
|                              | 7.33% notes due 2012              |                                 
|                              | 10.61% notes due 2017             |                                 
|                              | July 1999 additional issuances    |                                 
|                              | 9.22% notes due 2004              |                                 
|                              | Series B floating rate notes      |                                 
|                              | Series C floating rate notes      |                                 
|                              | February 2000 notes               |                                 
|                              | 9.03% notes due 2011              |                                 
|                              | 7.80% notes due 2013              |                                 
|Subordinated Debt Obligations |                                   |                                 
|                              | December 1998                     |                                 
|                              | February 1999                     |                                 
|                              | July 1999                         |                                 
|                              | February 2000                     |                                 
|                              |                                   |                                 
|Total                         |                                   | $                               
|                              |                                   |                                 

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As of December 31, 2003, the fair value of our financial instruments is as follows:

|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                             |  | $                         | 120 |                    | $ | 502                |  | $                             | 708 |                 
|Prices based on models and other valuation methods |  |                           | 35  |                    |   |                   |  |                               | 320 |                 

Results of Operations



Revenues are primarily composed of discounts on purchased accounts receivable and other income, which consists of:



The
following table sets forth the amount of revenues earned during the years ended December 31, 2001, 2002 and 2003 which are attributable to each source of revenues.

|                                                                             |                | Year ended December 31, |        
|---------------------------------------------------------------------------- | -------------- | ----------------------- | -------
|
|
|Income from discounts on future (ungenerated) purchased eligible receivables |                | $                       | 27,206 
|Income from discounts on current purchased eligible receivables              |                |                         | 490,028
|Other income                                                                 |                |                         | 7,649  
|                                                                             |                |                         |        
|                                                                             | Total revenues |                         | $      
|                                                                             |                |                         |        

---

Due
to our limited business, our revenue sources in the future are unlikely to change.

Purchased
accounts receivable include: (1) future eligible receivables (i.e., accounts receivable which have not been generated as of the date of the corresponding balance sheet)
and (2) current eligible receivables (i.e., accounts receivable which have been generated as of the date of the corresponding balance sheet).

We
record revenue from the discount on purchased accounts receivable for a period as income when earned as follows:



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During
the period from January 1, 2003 to December 31, 2003 the discount rate applied to the purchase of eligible receivables increased from 9.05408% to 9.11165%. During
the period from January 1, 2002 to December 31, 2002 the discount rate applied to the purchase of eligible receivables increased from 9.01741% to 9.05408% and during the period from
January 1, 2001 to December 31, 2001 the discount rate applied to the purchase of eligible receivables decreased from 9.16436% to 9.01741%. In each case the change in the discount rate
was as a result of the impact on the calculation of the discount rate of the varying interest rates on our floating rate notes.

The
discount rate applied to the eligible receivables purchased during these periods is equal to the weighted average of the yield of our outstanding Indebtedness on the purchase date
for those eligible receivables plus the "specified basis points". During these periods the specified basis points equaled 50 basis points. The total amount of the discount on each purchased eligible
receivable (i.e., the total revenue generated by each purchased eligible receivable) is determined by discounting the invoice amount of that eligible receivable for the period from the date on which
the purchase price for that eligible receivable was paid to PMI to the day on which the purchased eligible receivable is due from the designated customer.

Revenues
decreased by 6.8% in 2003 over 2002. The decrease in income from discounts on current purchased eligible receivables was largely due to the fact there was an increase in the
volume of crude oil exported and an increase in the Mexican crude oil basket price in 2003 compared to 2002, resulting in a shorter calculation period for current discount calculations compared to
2002. This is reflected in the 15.50% decrease in income from discounts on current purchased eligible receivables in 2003 compared to 2002.

Revenue
decreased by 6.10% in 2002 over 2001, primarily because of a 416.67% decrease in income from discounts on future (ungenerated) purchased eligible receivables. This decrease in
income from discounts on future (ungenerated) purchased eligible receivables is largely attributable to several factors. First, our obligations for payments of principal on our senior debt and
interest on our subordinated debt were greater in 2002 than in 2001, decreasing the amounts available to purchase eligible receivables. Second, there was an increase in the volume of crude oil
exported and an increase in the Mexican crude oil basket price in 2002 compared to 2001, resulting in the generation of more current accounts receivable, reflected in the 17.48% increase in income
from discounts on current purchased eligible receivables in 2002 over 2001. Since we purchase future (ungenerated) eligible receivables only when there are no current eligible receivables, the
decrease in amounts available to purchase eligible receivables, paired with the increase in current eligible receivables, led to the decrease in our purchase of, and our income from, future
(ungenerated) purchased eligible receivables.

Under
the receivables purchase agreement, eligible receivables of designated customers are purchased in the order they are generated: in other words, in the order the crude oil is
shipped. The amount of current eligible receivables owing from any designated customer is not subject to any concentration limit and is entirely dependent on (1) the volumes of crude oil those
designated customers purchased from PMI during the preceding 30 days and (2) the price PMI charges for each of those sales. Accordingly, the revenues derived from discounts on purchased
receivables paid by any designated customer or any group of designated customers is subject to continuous change.

Under
the receivables purchase agreement, eligible receivables which have been generated by PMI must be payable in full within 30 days, and they currently are paid within that
period. The limit may be extended to any longer period of up to 90 days if that becomes the prevailing practice in the international oil business. Under the receivables purchase agreement, PMI
is not required to generate any set amount of eligible receivables within any specified period.

The
32.8% decrease in other income in 2003 over 2002 and the 55.7% decrease in other income in 2002 over 2001 were primarily due to a decrease in our interest income from the investment
of funds in the liquidity account. Such decrease in interest income in turn was largely due to a general decrease in interest rates in the

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United
States, which was reflected in the interest rates of the securities in which we are allowed to invest liquidity account funds.



Financing costs consist of interest accrued on our outstanding debt as well as the premiums payable to MBIA and Ambac with respect to the insured series of Notes
and amortization of debt issuance costs. Financing costs decreased from U.S.$466.2 million in 2002 to U.S.$440.3 million in 2003, a decrease of 5.5%. The decrease was primarily due to a
decrease in the floating interest rate applicable to some series of our debt, as well as the maturity of two series of our notes in 2003, which reduced the amount of debt which we service. Financing
costs increased from U.S.$458.6 million in 2001 to U.S.$466.2 million in 2002, an increase of 1.66%. The increase was primarily due to an increase in the cost of servicing our
subordinated debt, as, effective January 1, 2002, the interest rate on such debt increased from a rate equal to the London Interbank Offered Rate (LIBOR) plus 300 or 350 points, depending on
the issuance, to a rate equal to the discount rate plus 300 basis points. The impact was partially offset by a decrease in the interest expense on our senior debt in 2002 from 2001, as the amount of
principal of such debt decreased.

The
following table sets forth the interest expense incurred in 2003, 2002 and 2001 with respect to each issuance:

Interest expense during2001

2002

2003(in thousands of U.S. dollars)1998 notes

$
94,020

$
86,579

$
79,720February 1999 notes


65,758


58,533


50,413February 1999 floating rate notes


7,686


5,096


4,570July 1999 notes


118,250


115,608


107,968July 1999 additional issuances


14,341


11,222


10,448February 2000 notes


83,940


83,940


83,940Subordinated debt


53,341


86,058


86,338Total

$
437,335

$
447,036

$
423,397




General and administrative expenses include primarily the expenses incurred in connection with the issuance of debt as well as in connection with services
rendered to us by PMI and certain of its affiliates, and include accounting, legal, rating, bank administration, listing and other fees and expenses associated with the performance of our obligations
under the transaction documents as well as, to a lesser degree, expenses incurred in connection with services rendered to us by PMI and certain of its affiliates.

General
and administrative expenses increased to U.S.$0.83 million in 2003 from U.S.$0.71 million in 2002. The 16.8% increase was largely due to increases in legal and
administrative expenses. General and administrative expenses decreased by 28.9% in 2002, to U.S.$0.71 million in 2002 from U.S.$1.00 million in 2001, largely due to the fact we did not
issue any debt in 2002 and that various legal and administrative expenses were paid in 2001.

Eligible
receivables we purchase under the receivables purchase agreement are serviced, managed, administered and collected by PMI acting as servicer under the servicing and collection
agency agreement. Fees paid to the servicer amounted to U.S.$0.39 million in 2003, U.S.$0.38 million in 2002 and U.S.$0.36 million in 2001.



We had no tax expense during 2003, 2002 or 2001.

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Net income decreased from U.S.$26.01 million in 2002 to U.S.$17.07 million in 2003, a decrease of 34.34%. Net income decreased from U.S.
$65.33 million in 2001 to U.S. $26.01 million in 2002, a decrease of 60.19%.

Liquidity and Capital Resources

Our sources of liquidity are collections on purchased receivables, the proceeds of our debt issuances and additional capital contributions. The collections on
purchased receivables are determined by the volume of eligible receivables generated, which is in turn affected by the volumes of crude oil exported and by international oil prices. We believe that
our working capital is sufficient for our present requirements.

We
have the following senior and subordinated debt outstanding:



We
had U.S.$4.7 billion in borrowings as of December 31, 2003. For information on the maturity profile of our borrowings, see "Item 11. Quantitative and Qualitative
Disclosures About Market Risk".

PEP's
and PMI's ability to generate eligible receivables of designated customers is dependent upon, among other factors, international prices for crude oil, volumes of crude oil exported
to designated customers and the frequency of shipments. Either of (1) a reduction in international oil prices which is not offset by an increase in the frequency of shipments and/or the volume
of crude oil sold to eligible customers or (2) the failure of designated customers to make timely payments with respect to purchased receivables, as well as increasing the length of the period
between our payment of the purchase price for the eligible receivable and our recovery of these funds through payments by the designated customers could result in a decrease in the level of
collections, which would in turn affect our liquidity.

During
2003, we used U.S.$11.3 billion to purchase accounts receivable from PMI Services. We funded these purchases with collections from purchased accounts receivable received
during the period.

During
2002, we used U.S.$7.7 billion to purchase accounts receivable from PMI Services. We funded these purchases with collections from purchased accounts receivable received
during the period.

During
2001, we used U.S.$ 6.4 billion to purchase accounts receivable from PMI Services. We funded these purchases with collections from purchased accounts receivable received
during the period.

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The following table sets forth the collections received on current purchased receivables and future eligible receivables that were generated and became current eligible receivables
during 2001, 2002 and 2003 as well as the purchased receivables to be generated as of December 31, 2001, 2002 and 2003:

|                                                                        |  | 2001 |         | 2002 |   | 2003   
|----------------------------------------------------------------------- |  | ---- | ------- | ---- | - | -------
|
|Collections on current purchased receivables                            |  | $    | 7,047.7 |      | $ | 8,629.5
|Receivables that were generated and became current eligible receivables |  |      | 452.4   |      |   | 878.7  
|Receivables to be generated in the future                               |  |      | 4,724.8 |      |   | 4,030.8

The
time required to generate our future purchased receivables at any given date is a function of many factors, including primarily, the price of Maya crude oil, the volume of Maya crude
oil PMI expects to sell to the designated customers and the amount of purchased receivables which remain to be generated. Changes in any of these factors during the period could increase or decrease
the time required.

When
we receive funds from collections in respect of purchased receivables we either:



The
period from the closing date of the 1998 notes, when we used the approximately U.S.$1.5 billion in proceeds of those notes to purchase eligible receivables, to the date on
which all of those receivables were generated was approximately seven months. During that period, the price of Maya crude oil averaged approximately U.S.$9.68 per barrel and PMI exported an average of
approximately 832 tbpd of Maya crude oil per month to the designated customers.

Off-balance Sheet Arrangements

We have no off-balance sheet arrangements of the type that we are required to disclose under Item 5.E of Form 20-F.

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Item 6.    Directors, Senior Management and Employees.

Petróleos Mexicanos and BNP Paribas Private Bank & Trust Cayman Limited (formerly BNP Private Bank & Trust Cayman Limited), as
trustee and administrator, entered into a management agreement as of December 1, 1998. Under the management agreement, BNP Paribas Private Bank & Trust Cayman Limited:



The
board of directors is responsible for preparing our year-end accounts and presenting them at shareholders' meetings, and for reviewing and monitoring our financial performance and
strategy. The current board of directors has five members.

In
accordance with our Memorandum and Articles of Association, directors hold their office until they are removed from office by an ordinary resolution of our shareholders in a general
meeting, or until they resign.

Our
current directors and executive officers are:

|Name                         |  | Position with Pemex Finance |  | Appointment
|---------------------------- |  | --------------------------- |  | -----------
|Ricardo Fernández Delgado    |  | Director and President      |  | 2003       
|Darren Riley                 |  | Director and Vice President |  | 1998       
|Regina Forman                |  | Director                    |  | 2003       
|Michael Austin               |  | Independent Director        |  | 1998       
|Piccadilly Directors Limited |  | Director                    |  | 1998       

In
the following paragraphs, we describe generally the business experience and present principal occupations of each member of our board of directors, including our president and vice
president:

Ricardo Fernández Delgadowas appointed Director and President of Pemex Finance in February 2003. He is also
currently the Associate Managing Director of Financial Legal Affairs of Petróleos Mexicanos. Prior to joining Petróleos Mexicanos, he worked as a legal adviser in the
Ministry of Finance and Public Credit.

Darren Rileywas appointed Director of Pemex Finance in November, 1998 and Vice President of Pemex Finance in June 2000. He serves
as a director of various Cayman Islands corporations and is also currently a Director and the General Manager of BNP Paribas Private Bank & Trust Cayman Limited and is, accordingly, responsible
for its day to day operation. Prior to joining BNP, Mr. Riley held a senior position within the investment banking arm of a major international banking group.

Regina Formanwas appointed Director of Pemex Finance in May, 2003. She serves as a director of various Cayman Islands corporations and is
currently the Manager of Corporate Services of BNP Paribas Private Bank & Trust Cayman Limited. Prior to joining BNP, Ms. Forman held a senior position with the Investment Services
Division of Deutsche Bank Cayman. Ms. Forman is a member of the Chartered Institute of Bankers (UK) and has a Diploma in Financial Services Management. Ms. Forman is also a Member of the
Institute of Chartered Bankers (Canada).

Michael Austinwas appointed Independent Director of Pemex Finance in November, 1998. He serves as a director of various Cayman Islands
companies and since 1997 has served as director of the Cayman Islands Monetary Authority. In March 2003 he was appointed Chairman of the Monetary Authority Board. From 1969 to 1992 he was a
Managing Partner of KPMG Peat Marwick's Cayman Islands Office. Mr. Austin is also a Notary Public and a Fellow (FCA) of the Institute of Chartered Accountants in England and Wales.

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Piccadilly Directors Limitedwas appointed Director of Pemex Finance in November, 1998. It is a wholly-owned subsidiary of BNP Paribas
Private Bank & Trust Cayman Limited.

Compensation of Directors and Officers

Pursuant to the management agreement, BNP Paribas Private Bank & Trust Cayman Limited receives an annual fee of U.S.$6,000 for the services of its
directors (Regina Forman, Darren Riley and Piccadilly Directors Limited) and for additional services. Michael Austin receives an annual fee of U.S.$10,000 for his services as independent director.
Ricardo Fernández Delgado is not compensated for his services as director.

Employees

Pemex Finance has no employees.

Share Ownership

None of our directors own any of our shares.

Item 7.    Major Shareholders and Related Party Transactions.

Pursuant to the declaration of trust establishing the Pemex Finance Trust, a charitable trust created under the laws of the Cayman Islands, all of our outstanding
shares are owned by BNP Paribas Private Bank & Trust Cayman Limited as trustee for the Pemex Finance Trust. Our authorized share capital consists of 1,000 ordinary shares, U.S.$1.00 par value
per share, all of which have been issued.

There
are no existing arrangements which may result in a change of control of Pemex Finance at a subsequent date in time.

Since
our inception there have been no, and there are no proposed, material transactions in which any director, officer or our shareholder is a party. None of our directors, officers, or
associates of any of our directors or officers have been indebted to us at any time since our inception.

We
consider PEMEX to be a related party, as we purchase all the current eligible receivables and rights to future (ungenerated) eligible receivables from PMI, which is an indirect
wholly-owned subsidiary of PEMEX. During 2003 we purchased U.S.$11.2 million of such eligible receivables and during 2002 we purchased U.S.$7.7 million of such eligible receivables. At
December 31, 2003 and 2002, we had subordinated debt outstanding from PEMEX of U.S.$714.8 million.

Item 8.    Financial Information.

See "Item 18.Financial Statements".

There
is no litigation or governmental proceeding pending or, to our knowledge, threatened against us that, if adversely determined, would have a significant effect on our financial
position or profitability. In addition, to our knowledge, there is no litigation pending or threatened against PMI Services that, if adversely determined, would have a significant effect on its
financial position or profitability.

We
have not declared dividends since our inception. For additional information on our dividend distribution policy, see "Item 10. Additional InformationMemorandum and
Articles of AssociationRights and Obligations of ShareholdersDividends".

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Item 9.    The Offer and Listing.

Our stock is not registered and there is no trading market for it. Trading in the Notes takes place primarily in the over-the-counter
market; accordingly, we have been unable to obtain reliable information on such trading. The 1998 notes, the February 1999 notes, the February 1999 floating rate notes, the
July 1999 notes and the February 2000 notes are listed on the Luxembourg Stock Exchange.

Item 10.    Additional Information.

MEMORANDUM AND ARTICLES OF ASSOCIATION

Register

We are a limited liability company incorporated in the Cayman Islands under the Companies Law (2003 Revision), as amended company registration number 85919. We
registered and filed our Memorandum and Articles of Association with the Registrar of Companies on November 18th, 1998. There has been no subsequent amendment to our Memorandum and Articles of
Association.

Objects and Purposes

Our Memorandum of Association grants us full power and authority to carry out any object not prohibited by law. Nevertheless, the sole object for which we are
established the business of banking and finance (outside the Cayman Islands) through acquiring eligible receivables and incurring indebtedness.

Directors

Directors may vote on a proposal, arrangement or contract in which they are interested. However, interested directors must declare the nature of their interest at
a directors' meeting. If the interested directors declare their interest, their votes are counted and they are counted in the quorum of such meeting.

The
directors may exercise our powers including to borrow money and issue debt securities.

Directors
are not required to own shares.

Rights and Obligations of Shareholders



Shareholders may declare dividends in a general meeting but the dividends cannot exceed the amount recommended by the directors. The directors may pay the
shareholders interim dividends and may, before recommending any dividend, set aside reserves out of profits. The directors can invest these reserves in their discretion so long as the reserves are not
being used for these purposes.

Dividends
may be paid in cash or in kind but may only be paid out of profits or, subject to the restrictions of Cayman Islands law, a share premium account.



Votes may be cast at a general meeting by a show of hands or by a poll. On a vote by a show of hands, each shareholder or shareholder represented by proxy has one
vote. On a vote by a poll, each shareholder or shareholder represented by proxy has one vote for each share owned.

Directors
are elected by the shareholders at general meetings. Shareholders are not entitled to vote at a general meeting unless calls or other amounts payable on their shares have been
paid. In lieu of voting on a matter at a general meeting, the shareholders entitled to vote on that matter may adopt the matter by signing a resolution.

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We may issue shares which are redeemable by us or by our shareholders. The amount payable on each share in a redemption is its fair value as determined by the
directors.

Where
we have agreed to purchase any share from a shareholder, we will give notice to the other shareholders, if any, specifying the number and class of shares to be purchased, the name
and address of the seller, the price to be paid for the shares and the portion (if any) of that price which is being paid out of capital. The notice will also indicate a date on which the purchase is
to be effected and will invite shareholders other than the seller, if any, to object to the purchase before that date.



If we are liquidated, the liquidator may (in accordance with a shareholder resolution):



Shareholders
will not be compelled to accept any securities on which there is a liability.



Directors may make calls on the shareholders with respect to any amounts unpaid on their shares. Each shareholder shall pay to the company the amounts called on
such shares.



Shareholders may change the rights of their class of shares by:



We
have only one class of shares. There are no limitations on the rights to own shares.

General Meetings

A general meeting may be convened:



Notice
of a general meeting is given to all shareholders.

All
business carried out at a general meeting is considered special business except:



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Shareholder
consent is required to carry out special business at a meeting unless notice of the special business is given in the notice of the meeting. A quorum of shareholders is
required to be present at any meeting in order to carry out business. Any two shareholders or one shareholder holding a majority of the shares who are present in person or represented by proxy is a
quorum.

There
is no requirement under Cayman Islands law to convene an annual meeting or to convene any general meeting of the shareholders. The directors are permitted to designate any general
meeting of shareholders as an annual general meeting.

Changes in Capital

We may increase our share capital by ordinary resolution. The new shares will be subject to all of the provisions to which the original shares are subject.

We
may also by ordinary resolution:



We
may reduce our share capital and any capital redemption reserve by special resolution.

EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS

There are:



TAXATION

The following is a summary of principal Cayman Islands and United States federal income tax considerations that may be relevant to the purchase, ownership, and
disposition of the Notes. This summary does not describe any tax consequences arising under the laws of any state, locality or taxing jurisdiction other than the United States and the Cayman Islands.

This
summary is based on the tax laws of the Cayman Islands and the United States as in effect on the date of this annual report, as well as regulations, rulings and decisions of the
Cayman Islands and the United States available on or before the date of this annual report and now in effect. All of these laws, regulations, rulings and decisions are subject to change, which could
apply retroactively and cause statements in this summary to no longer be true. There is no reciprocal tax treaty between the Cayman Islands and the United States.

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Cayman Islands Taxation

Payments of principal and interest on the Notes will not be subject to taxation in the Cayman Islands. No withholding is required on these payments to the holders
of the Notes, and gains derived from the sale of Notes will not be subject to Cayman Islands income or corporation tax.

U.S. Federal Income Taxation

This summary of some United States federal income tax considerations deals principally with U.S. holders who will hold Notes as capital assets and whose
functional currency is the U.S. dollar. A "U.S. holder" means a beneficial owner of a Note who is a citizen or resident of the United States or a U.S. domestic corporation or will otherwise be subject
to United States federal income taxation on a net income basis in respect of the Notes.

This
summary is not a comprehensive description of all of the tax considerations that may be relevant to a U.S. holder's decision to purchase, hold or dispose of Notes and generally does
not address the tax treatment of U.S. holders that may be subject to special tax rules, such as banks, tax-exempt entities, insurance companies, dealers in securities or currencies,
traders in securities electing to mark to market or persons that will hold Notes as a position in a "straddle" or conversion transaction, or as part of a "synthetic security" or other integrated
financial transaction.



A U.S. holder will treat the gross amount of interest (including any additional amounts paid to compensate the U.S. holder for amounts withheld or deducted from
payments) paid in respect of the Notes as ordinary interest income at the time that it is paid or accrued, in accordance with the U.S. holder's method of accounting for United States federal income
tax purposes.



In general a U.S. holder of a Note will recognize gain or loss upon the sale, exchange, redemption, retirement or other disposition of the Note equal to the
difference between the amount realized on the disposition (to the extent such amount does not represent accrued but unpaid interest, which will be taxable as ordinary income) and the U.S. holder's
adjusted basis in the Note. Initially, the U.S. holder's adjusted basis in the Note generally will equal the cost of the Note to the U.S. holder, and will increase by amounts included in income by the
U.S. holder under the rules governing market discount, discussed below, and will decrease by the amount of amortized premium, discussed below.

The
gain or loss on a disposition of a Note by a U.S. holder generally will be capital gain or loss and will be long-term capital gain or loss if the U.S. holder holds the
Note for more than one year prior to disposition. The net amount of long-term capital gain recognized by an individual holder before January 1, 2009 generally is subject to taxation
at a maximum rate of 15%.



A U.S. holder that purchases a Note at a cost greater than the Note's principal amount will be considered to have purchased the Note at a premium and may elect to
amortize the premium as an offset to interest income, using a constant yield method, over the Note's remaining term. This election generally applies to all debt instruments that the U.S. holder holds
at the time of the election, as well as any debt instruments held during or after the taxable year for which the election is made. In addition, the U.S. holder may not revoke the election without the
consent of the United States Internal Revenue Service. A U.S. holder electing to amortize the premium will be required to reduce its tax basis in the Note by the amount of the premium amortized during
its holding period. If a U.S. holder with a premium does not elect to amortize the premium, the amount of the premium will be included in the U.S. holder's tax basis in the Note, and therefore, if the
Note is held to maturity, will generally give rise to capital loss when the Note matures.

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A U.S. holder that purchases a Note at a cost that is lower than its principal amount will be considered to have purchased a Note with a "market discount" in the
hands of such U.S. holder (unless the amount of such excess is less that a specifiedde minimisamount, in which case the Note will not be considered to
have a market discount). If a U.S. holder acquired a Note with market discount, any gain realized by the U.S. Holder on the disposition of the Note generally will be treated as ordinary interest
income to the extent of the market discount that accrued on the Note during the U.S. holder's holding period. In addition, a U.S. holder may be required to defer the deduction of a portion of the
interest paid on any indebtedness that it incurred or continued to purchase or carry the Note. In general, market discount will be treated as accruing ratably over the term of the Note, or at the U.S.
holder's election, under a constant yield method.

A
U.S. holder may elect to include market discount in gross income currently as it accrues (on either a ratable or constant yield basis), in lieu of treating a portion of any gain
realized on a sale of the Note as ordinary income, in which case the interest deduction deferral rule described above will not apply. If made, this election applies to all market discount debt
instruments that the U.S. holder acquires on or after the first day of the first taxable year to which the election applies and may not be revoked without the consent of the United States Internal
Revenue Service.

Non-U.S. Holders

Subject to the discussion of backup withholding below, a holder of Notes who is, with respect to the United States a foreign corporation or nonresident alien
individual (a "non-U.S. holder"), will not be subject to United States federal income tax, including withholding taxes, on any payments of interest on the Notes, unless the income from
payments on the Notes is effectively connected with his or her conduct of a trade or business in the United States.

Subject
to the discussion of backup withholding below, a non-U.S. holder also will not be subject to United States federal income tax on any capital gain realized on the sale
or exchange of Notes, unless:



In
addition, if individual holders at the time of their deaths are nonresident aliens, any Notes held by such individuals will not be subject to United States federal estate tax.

Backup Withholding and Information Reporting

The trustee may be required to file information returns with the United States Internal Revenue Service with respect to payments made to some U.S. holders of
Notes. In addition, a U.S. holder may be subject to a backup withholding tax in respect of some payments if he or she does not provide his or her taxpayer identification number to the trustee or
otherwise comply with applicable requirements of the backup withholding rules. In order to avoid the information reporting requirements and backup withholding tax, a non-U.S. holder may be
required to comply with applicable certification procedures to establish that he or she is not a U.S. holder. Any amounts withheld under the backup withholding rules are not an additional tax and may
be refunded or credited against his or her United States federal income tax liability, if any, provided such holder furnishes required information to the United States Internal Revenue Service.

DOCUMENTS ON DISPLAY

We are subject to the informational 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
prescribed rates) at the SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please

91

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call
the SEC at 1-800-SEC-0330 for further information on the public reference room. The SEC also maintains a web site at
http://www.sec.gov that contains reports, proxy statements and other filings we make electronically with the SEC. In addition, copies of the receivables purchase
agreement, fiscal paying agency agreement, servicing and collection agency agreement and the letter agreement are available for inspection at the principal office of the fiscal agent in the City of
New York, which is presently located at JP Morgan Chase, Capital Markets Fiduciary Services, 450 West 33rd Street, 15th Floor, New York, New York 10001.

Item 11.    Quantitative and Qualitative Disclosures About Market Risk.

The
following discussion includes "forward-looking statements" that involve risk and uncertainties. Actual results could differ materially from those projected in the forward-looking
statements.

The
following table summarizes the financial instruments we held at December 31, 2003 which are sensitive to changes in interest rates. We do not use any derivative instruments to
manage this primary market exposure. In the normal course of business, we also face risks that are non-financial or non-quantifiable. Such risks include credit risk and are not
represented in the following table. For more information on credit risk, see Note 2e to our financial statements in Item 18. Further, since all of our debt is dollar denominated, we are not
subject to material foreign exchange rate risk.

The
table below sets forth the amounts and related average interest rates by expected maturity dates of our long-term debt obligations as of December 31, 2003.

Calendar Year of Expected Maturity Date for Debt  (in thousands of U.S. Dollars)  December 31, 2003

|Outstanding
Debt                       |  | 2004 |         | 2005 |   | 2006    |  | 2007 |         | 2008 |   | Thereafter |  | Total
Carrying
Value |         | Fair
Value
|-------------------------------------- |  | ---- | ------- | ---- | - | ------- |  | ---- | ------- | ---- | - | ---------- |  | -------------------- | ------- | ----------
|Fixed rate debt                        |  | $    | 309,727 |      | $ | 340,560 |  | $    | 406,560 |      | $ | 523,893    |  | $                    | 515,677 |           
|Average interest rate                  |  |      | 8.47%   |      |   | 8.48%   |  |      | 8.47%   |      |   | 8.50%      |  |                      | 8.58%   |           
|Variable rate debt floating rate notes |  | $    | 35,000  |      |   |        |  |      |        |      |   |           |  |                      |        |           
|Subordinated debt to PEMEX             |  |      |        |      |   |        |  |      |        |      |   |           |  |                      |        |           

---

Item 12.    Description of Securities Other than Equity Securities.

Not applicable.

Item 13.    Defaults, Dividend Arrearages and Delinquencies.

Not applicable.

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

None.

Item 15.    Controls and Procedures

As of December 31, 2003, we carried out an evaluation under the supervision and with the participation of our management, including our president, of the
effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2003. 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 controls and procedures can only
provide reasonable assurance of achieving their control objectives. Based upon and as of the date of our evaluation, our president concluded that the disclosure controls and procedures as of
December 31, 2003 are effective to provide reasonable assurance that information required to be disclosed in the reports we file and submit under the U.S. Securities Exchange Act of 1934, as
amended, is recorded, processed, summarized and reported as and when required.

There
has been no change in our internal control over financial reporting during 2003 that has materially affected, or is reasonably likely to materially affect, our internal control
over financial reporting.

Item 16.    [Reserved]

Item 16A.    Audit Committee Financial Expert.

We have no separate audit committee, and so our board of directors serves as our audit committee.

Our
board of directors has determined that Michael Austin qualifies as an "audit committee financial expert" within the meaning of this Item 16A.

Item 16B.    Code of Ethics.

We have adopted a code of ethics, as defined in Item 16B of Form 20-F under the Securities Exchange Act of 1934, as amended. Our code of ethics
applies to our president, who performs similar functions to a chief executive officer, chief financial officer, and chief accounting officer, as well as to the other members of our board of directors.
Our code of ethics is filed as an exhibit to this Form 20-F. If we amend the provisions of our code of ethics that apply to our president, or if we grant any waiver of such
provisions, we will disclose such amendment or waiver.

Item 16C.    Principal Accountant Fees and Services.

Audit and Non-Audit Fees

The following table sets forth the fees billed to us by our independent auditors for purposes of U.S. GAAP, PricewaterhouseCoopers, S.C., Independent Registered
Public Accounting Firm, during the fiscal years ended December 31, 2002 and 2003:

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|                   |            | Year ended December 31,
|------------------ | ---------- | -----------------------
|
|Audit fees         |            | $                      
|Audit-related fees |            |                        
|Tax fees           |            |                        
|Other fees         |            |                        
|                   |            |                        
|                   | Total fees |                        
|                   |            |                        

Audit
fees in the above table are the aggregate fees billed by PricewaterhouseCoopers in connection with the audit of our balance sheets and related statements of income, of changes in
shareholder's equity and of cash flows as of and for the years ended December 31, 2003, 2002 and 2001, in accordance with auditing standards generally accepted in the United States of America,
which audit includes preparing an audit report.

There
were no Audit-related fees or Tax Fees billed by PricewaterhouseCoopers in 2003 and 2002.

Other
fees in the above table are fees billed by PricewaterhouseCoopers primarily related to carrying out agreed-upon procedures and preparing an agreed-upon
procedures letter for the year ended December 31, 2002 pursuant to the Servicing and Collection Agency Agreement dated December 1, 1998, by and among us, PMI Services, PMI, PEMEX and
Standard Chartered Bank (as successor to UBS AG, New York Branch).

Audit Committee Pre-Approval Policies and Procedures

The board of directors delegated to the president of the board of directors the authority to grant pre-approvals for the following audit and
non-audit services provided by independent public accountants:



The
decisions of the president to pre-approve an activity pursuant to the pre-approval policies and procedures shall be presented to the full board of directors,
acting in its capacity as audit committee, at each of its scheduled meetings.

Item 16D.    Exemptions from the Listing Standards for Audit Committees.

Not applicable.

Item 16E.    Purchases of Equity Securities by the Issuer and Affiliated Purchasers.

Not applicable.

Item 17.    Financial Statements.

Pemex Finance has responded to Item 18 in lieu of this item.

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Item 18.    Financial Statements.

See pages F-1 through F-19, incorporated herein by reference.

Item 19.    Exhibits.

The financial statements of Pemex Finance as of December 31, 2003 and 2002 and for the years ended December 31, 2003, 2002 and 2001 are attached
hereto on pages F-1 through F-19 and are incorporated herein by reference.



| |  |                                                              |  | Page
| |  | ------------------------------------------------------------ |  | ----
| |  | Report of the Independent Registered Public Accounting Firm  |  | F-3 
| |  | Balance Sheets                                               |  | F-4 
| |  | Statements of Income                                         |  | F-5 
| |  | Statements of Changes in Shareholder's Equity                |  | F-6 
| |  | Statements of Cash Flows                                     |  | F-7 
| |  | Notes to the Financial Statements December 31, 2003 and 2002 |  | F-8 

| |  | (b) Exhibit No: |  | Description                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | --------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Exhibit 1.1     |  | Memorandum and Articles of Association of Issuer (incorporated by reference to Exhibit 3.1 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on September 30, 1999
(registration statement no. 333-10920))                                                                                                                                                         
| |  | Exhibit 2.1     |  | Fiscal and Paying Agency Agreement, dated as of December 1, 1998 among the Issuer, The Chase Manhattan Bank, as Fiscal Agent, and Chase Manhattan Bank Luxembourg S.A., as paying agent (incorporated by reference to Exhibit 4.1 to the Registration
Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on September 30, 1999 (registration statement no. 333-10920))                  
| |  | Exhibit 2.2     |  | Amendment to the Fiscal and Paying Agency Agreement, dated as of February 10, 2000 among the Issuer, The Chase Manhattan Bank, as Fiscal Agent, and Chase Manhattan Bank Luxembourg S.A., as paying agent (incorporated by reference to exhibit 2.1 to the
Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on September 27, 2000 (registration statement no. 333-12614))
| |  | Exhibit 2.3     |  | Senior Indenture, dated as of December 1, 1998, between the Issuer and The Chase Manhattan Bank, as Trustee (incorporated by reference to Exhibit 4.2 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed
on September 30, 1999 (registration statement no. 333-10920))                                                                                              
| |  | Exhibit 2.4     |  | First 8.02% Note Supplemental Indenture, dated as of December 1, 1998, between the Issuer and The Chase Manhattan Bank, as Trustee (incorporated by reference to Exhibit 4.4 to the Registration Statement of Pemex Finance Ltd. and Petróleos
Mexicanos on Form F-4 filed on September 30, 1999 (registration statement no. 333-10920))                                                                       
| |  |                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                

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| |  | Exhibit 2.5  |  | First 6.30% Note Supplemental Indenture, dated as of December 1, 1998, among the Issuer, Ambac Assurance Corporation, as 6.30% Note Enhancer, The Chase Manhattan Bank, as Fiscal Agent, and The Chase Manhattan Bank, as Trustee (incorporated by
reference to Exhibit 4.5 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on September 30, 1999 (registration statement no. 333-10920))    
| |  | ------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Exhibit 2.6  |  | First 9.15% Note Supplemental Indenture, dated as of December 1, 1998, between the Issuer and The Chase Manhattan Bank, as Trustee (incorporated by reference to Exhibit 4.6 to the Registration Statement of Pemex Finance Ltd. and Petróleos
Mexicanos on Form F-4 filed on September 30, 1999 (registration statement no. 333-10920))                                                                                                   
| |  | Exhibit 2.7  |  | Second 8.450% Note Supplemental Indenture, dated as of February 25, 1999, between the Issuer and The Chase Manhattan Bank, as Trustee (incorporated by reference to Exhibit 4.8 to the Registration Statement of Pemex Finance Ltd. and Petróleos
Mexicanos on Form F-4 filed on September 30, 1999 (registration statement no. 333-10918))                                                                                                
| |  | Exhibit 2.8  |  | Second 6.550% Note Supplemental Indenture, dated as of February 25, 1999, among the Issuer, Ambac Assurance Corporation, as 6.550% Note Enhancer, The Chase Manhattan Bank, as Fiscal Agent, and The Chase Manhattan Bank, as Trustee (incorporated by
reference to Exhibit 4.9 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on September 30, 1999 (registration statement no. 333-10918))
| |  | Exhibit 2.9  |  | Second 8.875% Note Supplemental Indenture, dated as of February 25, 1999, between the Issuer and The Chase Manhattan Bank, as Trustee (incorporated by reference to Exhibit 4.10 to the Registration Statement of Pemex Finance Ltd. and Petróleos
Mexicanos on Form F-4 filed on September 30, 1999 (registration statement no. 333-10918))                                                                                               
| |  | Exhibit 2.10 |  | Floating Rate Notes, Series A, Supplemental Indenture, dated as of February 25, 1999, between the Issuer and The Chase Manhattan Bank, as Trustee (incorporated by reference to Exhibit 4.11 to the Registration Statement of Pemex Finance Ltd. and
Petróleos Mexicanos on Form F-4 filed on September 30, 1999 (registration statement no. 333-10918))                                                                                   
| |  | Exhibit 2.11 |  | Third 9.14% Note Supplemental Indenture, dated as of July 27, 1999, between the Issuer and The Chase Manhattan Bank, as Trustee (incorporated by reference to Exhibit 4.12 to the Registration Statement of Pemex Finance Ltd. and Petróleos
Mexicanos on Form F-4 filed on September 30, 1999 (registration statement no. 333-10916))                                                                                                     
| |  | Exhibit 2.12 |  | Third 9.69% Note Supplemental Indenture, dated as of July 27, 1999, between the Issuer and The Chase Manhattan Bank, as Trustee (incorporated by reference to Exhibit 4.13 to the Registration Statement of Pemex Finance Ltd. and Petróleos
Mexicanos on Form F-4 filed on September 30, 1999 (registration statement no. 333-10916))                                                                                                     
| |  | Exhibit 2.13 |  | Third 7.33% Note Supplemental Indenture, dated as of July 27, 1999, between the Issuer, MBIA Insurance Corporation, as 7.33% Note Enhancer, The Chase Manhattan Bank, as Fiscal Agent, and The Chase Manhattan Bank, as Trustee (incorporated by reference
to Exhibit 4.14 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on September 30, 1999 (registration statement no. 333-10916))     
| |  |              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                            

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| |  | Exhibit 2.14 |  | Third 10.61% Note Supplemental Indenture, dated as of July 27, 1999, between the Issuer and The Chase Manhattan Bank, as Trustee (incorporated by reference to Exhibit 4.15 to the Registration Statement of Pemex Finance Ltd. and Petróleos
Mexicanos on Form F-4 filed on September 30, 1999 (registration statement no. 333-10916))                                                                                                    
| |  | ------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Exhibit 2.15 |  | Floating Rate Notes, Series B, Supplemental Indenture, dated as of July 27, 1999, between the Issuer and The Chase Manhattan Bank, as Trustee (incorporated by reference to Exhibit 4.17 to the Registration Statement of Pemex Finance Ltd. and
Petróleos Mexicanos on Form F-4 filed on September 30, 1999 (registration statement no. 333-10916))                                                                                       
| |  | Exhibit 2.16 |  | Floating Rate Notes, Series C, Supplemental Indenture, dated as of July 27, 1999, between the Issuer and The Chase Manhattan Bank, as Trustee (incorporated by reference to Exhibit 4.18 to the Registration Statement of Pemex Finance Ltd. and
Petróleos Mexicanos on Form F-4 filed on September 30, 1999 (registration statement no. 333-109186))                                                                                      
| |  | Exhibit 2.17 |  | Fourth 9.03% Note Supplemental Indenture, dated as of February 10, 2000, between the Issuer and The Chase Manhattan Bank, as Trustee (incorporated by reference to exhibit 2.19 to the Registration Statement of Pemex Finance Ltd. and Petróleos
Mexicanos on Form F-4 filed on September 27, 2000 (registration statement no. 333-12614))                                                                                                
| |  | Exhibit 2.18 |  | Fourth 7.80% Note Supplemental Indenture, dated as of February 10, 2000, between the Issuer, MBIA Insurance Corporation, as 7.80% Note Enhancer, The Chase Manhattan Bank, as Fiscal Agent, and The Chase Manhattan Bank, as Trustee (incorporated by
reference to exhibit 2.20 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on September 27, 2000 (registration statement no. 333-12614))
| |  | Exhibit 2.19 |  | Financial Guarantee Policy, Ambac Assurance Corporation, dated as of December 14, 1998 (incorporated by reference to Exhibit 4.26 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on September 30,
1999 (registration statement no. 333-10920))                                                                                                                                              
| |  | Exhibit 2.20 |  | Insurance and Reimbursement Agreement, dated as of December 14, 1998, between Ambac Assurance Corporation and the Issuer (incorporated by reference to Exhibit 4.27 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on
Form F-4 filed on September 30, 1999 (registration statement no. 333-10920))                                                                                                            
| |  | Exhibit 2.21 |  | Financial Guarantee Policy, Ambac Assurance Corporation, dated as of February 25, 1999 (incorporated by reference to Exhibit 4.28 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on September 30,
1999 (registration statement no. 333-10918))                                                                                                                                              
| |  | Exhibit 2.22 |  | Insurance and Reimbursement Agreement, dated as of February 25, 1999, between Ambac Assurance Corporation and the Issuer (incorporated by reference to Exhibit 4.29 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on
Form F-4 filed on September 30, 1999 (registration statement no. 333-10918))                                                                                                            
| |  | Exhibit 2.23 |  | Financial Guarantee Policy, MBIA Insurance Corporation, dated as of July 27, 1999 (incorporated by reference to Exhibit 4.28 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on September 30, 1999
(registration statement no. 333-10918))                                                                                                                                                   
| |  |              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                            

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| |  | Exhibit 2.24 |  | Insurance and Reimbursement Agreement, dated as of July 27, 1999, between MBIA Insurance Corporation and the Issuer (incorporated by reference to Exhibit 4.29 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form
F-4 filed on September 30, 1999 (registration statement no. 333-10918))                                                                                                                                                                                          
| |  | ------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Exhibit 2.25 |  | Financial Guarantee Insurance Policy, MBIA Insurance Corporation, dated as of February 10, 2000 (incorporated by reference to exhibit 4.9 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on
September 27, 2000 (registration statement no. 333-12614))                                                                                                                                                                                                               
| |  | Exhibit 2.26 |  | Insurance and Reimbursement Agreement, dated as of February 10, 2000, between MBIA Insurance Corporation and the Issuer (incorporated by reference to exhibit 4.10 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on
Form F-4 filed on September 27, 2000 (registration statement no. 333-12614))                                                                                                                                                                                      
| |  | Exhibit 2.27 |  | Receivables Purchase Agreement, dated as of December 1, 1998, among the Issuer, P.M.I. Comercio Internacional, S.A. de C.V., P.M.I. Services B.V., and Pemex Exploración y Producción (incorporated by reference to Exhibit 10.1 to the
Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on September 30, 1999 (registration statement no. 333-10920))                                                                                                                        
| |  | Exhibit 2.28 |  | Amendment to the Receivables Purchase Agreement, dated as of February 10, 2000, among the Issuer, P.M.I. Comercio Internacional, S.A. de C.V., P.M.I. Services B.V., and Pemex Exploración y Producción (incorporated by reference to
exhibit 2.34 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on September 27, 2000 (registration statement no. 333-12614))                                                                                                      
| |  | Exhibit 2.29 |  | Servicing and Collection Agency Agreement, dated as of December 1, 1998, among the Issuer, P.M.I. Services, B.V., P.M.I. Comercio Internacional, S.A. de C.V., in its individual capacity and as Servicer, Petróleos Mexicanos, solely as
Investment Manager, and UBS AG, New York Branch as Collection Agent (incorporated by reference to Exhibit 10.2 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on September 30, 1999 (registration
statement no. 333-10920))
| |  | Exhibit 2.30 |  | Letter Agreement, dated as of December 14, 1998, between the Issuer and Petróleos Mexicanos (incorporated by reference to Exhibit 10.3 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on
September 30, 1999 (registration statement no. 333-10920))                                                                                                                                                                                                                  
| |  | Exhibit 2.31 |  | Letter Agreement, dated as of February 25, 1999, among Petróleos Mexicanos, the Issuer, P.M.I. Services B.V., P.M.I. Comercio Internacional, S.A. de C.V. and Pemex Exploración y Producción (incorporated by reference to Exhibit
10.4 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on September 30, 1999 (registration statement no. 333-10920))                                                                                                                 
| |  | Exhibit 11.1 |  | Pemex Finance Limited Code of Ethics                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | Exhibit 12.1 |  | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                               
| |  | Exhibit 13.1 |  | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                              
| |  |              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  |              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

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| |  | Exhibit 99.1 |  | Annual report on Form 20-F of Petróleos Mexicanos, for the year ended December 31, 2002, as filed with the SEC (Commission file No. 1-99) on June 27, 2003 (incorporated herein by reference)                                                                                      
| |  | ------------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Exhibit 99.2 |  | U.S. Market Analysis for Mexican Crude Oil, prepared by Purvin & Gertz, Inc. (incorporated by reference to exhibit 99.6 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on September 27, 2000
(registration statement no. 333-12614))

99

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SIGNATURE

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant certifies that it meets all 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.

| |  | PEMEX FINANCE LTD.                                                          
| |  | ----------------------------------------------------------------------------
| |  | /s/RICARDO FERNÁNDEZ DELGADORicardo Fernández Delgado
Director and President

Date:
June 30, 2004

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EXHIBIT INDEX

|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                            
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 1.1 |  | Memorandum and Articles of Association of Issuer (incorporated by reference to Exhibit 3.1 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on September 30, 1999
(registration statement no. 333-10920))                                                                                                                                                                                 
|Exhibit 2.1 |  | Fiscal and Paying Agency Agreement, dated as of December 1, 1998 among the Issuer, The Chase Manhattan Bank, as Fiscal Agent, and Chase Manhattan Bank Luxembourg S.A., as paying agent (incorporated by reference to Exhibit 4.1 to the Registration
Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on September 30, 1999 (registration statement no. 333-10920))                                          
|Exhibit 2.2 |  | Amendment to the Fiscal and Paying Agency Agreement, dated as of February 10, 2000 among the Issuer, The Chase Manhattan Bank, as Fiscal Agent, and Chase Manhattan Bank Luxembourg S.A., as paying agent (incorporated by reference to exhibit 2.1 to the
Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on September 27, 2000 (registration statement no. 333-12614))                        
|Exhibit 2.3 |  | Senior Indenture, dated as of December 1, 1998, between the Issuer and The Chase Manhattan Bank, as Trustee (incorporated by reference to Exhibit 4.2 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed
on September 30, 1999 (registration statement no. 333-10920))                                                                                                                      
|Exhibit 2.4 |  | First 8.02% Note Supplemental Indenture, dated as of December 1, 1998, between the Issuer and The Chase Manhattan Bank, as Trustee(incorporated by reference to Exhibit 4.4 to the Registration Statement of Pemex Finance Ltd. and Petróleos
Mexicanos on Form F-4 filed on September 30, 1999 (registration statement no. 333-10920))                                                                                                
|Exhibit 2.5 |  | First 6.30% Note Supplemental Indenture, dated as of December 1, 1998, among the Issuer, Ambac Assurance Corporation, as 6.30% Note Enhancer, The Chase Manhattan Bank, as Fiscal Agent, and The Chase Manhattan Bank, as Trustee (incorporated by
reference to Exhibit 4.5 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on September 30, 1999 (registration statement no. 333-10920))
|Exhibit 2.6 |  | First 9.15% Note Supplemental Indenture, dated as of December 1, 1998, between the Issuer and The Chase Manhattan Bank, as Trustee (incorporated by reference to Exhibit 4.6 to the Registration Statement of Pemex Finance Ltd. and Petróleos
Mexicanos on Form F-4 filed on September 30, 1999 (registration statement no. 333-10920))                                                                                               
|Exhibit 2.7 |  | Second 8.450% Note Supplemental Indenture, dated as of February 25, 1999, between the Issuer and The Chase Manhattan Bank, as Trustee (incorporated by reference to Exhibit 4.8 to the Registration Statement of Pemex Finance Ltd. and Petróleos
Mexicanos on Form F-4 filed on September 30, 1999 (registration statement no. 333-10918))                                                                                            
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                        

---



|Exhibit 2.8  |  | Second 6.550% Note Supplemental Indenture, dated as of February 25, 1999, among the Issuer, Ambac Assurance Corporation, as 6.550% Note Enhancer, The Chase Manhattan Bank, as Fiscal Agent, and The Chase Manhattan Bank, as Trustee (incorporated by
reference to Exhibit 4.9 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on September 30, 1999 (registration statement no. 333-10918))
|------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 2.9  |  | Second 8.875% Note Supplemental Indenture, dated as of February 25, 1999, between the Issuer and The Chase Manhattan Bank, as Trustee (incorporated by reference to Exhibit 4.10 to the Registration Statement of Pemex Finance Ltd. and Petróleos
Mexicanos on Form F-4 filed on September 30, 1999 (registration statement no. 333-10918))                                                                                               
|Exhibit 2.10 |  | Floating Rate Notes, Series A, Supplemental Indenture, dated as of February 25, 1999, between the Issuer and The Chase Manhattan Bank, as Trustee (incorporated by reference to Exhibit 4.11 to the Registration Statement of Pemex Finance Ltd. and
Petróleos Mexicanos on Form F-4 filed on September 30, 1999 (registration statement no. 333-10918))                                                                                   
|Exhibit 2.11 |  | Third 9.14% Note Supplemental Indenture, dated as of July 27, 1999, between the Issuer and The Chase Manhattan Bank, as Trustee (incorporated by reference to Exhibit 4.12 to the Registration Statement of Pemex Finance Ltd. and Petróleos
Mexicanos on Form F-4 filed on September 30, 1999 (registration statement no. 333-10916))                                                                                                     
|Exhibit 2.12 |  | Third 9.69% Note Supplemental Indenture, dated as of July 27, 1999, between the Issuer and The Chase Manhattan Bank, as Trustee (incorporated by reference to Exhibit 4.13 to the Registration Statement of Pemex Finance Ltd. and Petróleos
Mexicanos on Form F-4 filed on September 30, 1999 (registration statement no. 333-10916))                                                                                                     
|Exhibit 2.13 |  | Third 7.33% Note Supplemental Indenture, dated as of July 27, 1999, between the Issuer, MBIA Insurance Corporation, as 7.33% Note Enhancer, The Chase Manhattan Bank, as Fiscal Agent, and The Chase Manhattan Bank, as Trustee (incorporated by reference
to Exhibit 4.14 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on September 30, 1999 (registration statement no. 333-10916))     
|Exhibit 2.14 |  | Third 10.61% Note Supplemental Indenture, dated as of July 27, 1999, between the Issuer and The Chase Manhattan Bank, as Trustee (incorporated by reference to Exhibit 4.15 to the Registration Statement of Pemex Finance Ltd. and Petróleos
Mexicanos on Form F-4 filed on September 30, 1999 (registration statement no. 333-10916))                                                                                                    
|Exhibit 2.15 |  | Floating Rate Notes, Series B, Supplemental Indenture, dated as of July 27, 1999, between the Issuer and The Chase Manhattan Bank, as Trustee (incorporated by reference to Exhibit 4.17 to the Registration Statement of Pemex Finance Ltd. and
Petróleos Mexicanos on Form F-4 filed on September 30, 1999 (registration statement no. 333-10916))                                                                                       
|Exhibit 2.16 |  | Floating Rate Notes, Series C, Supplemental Indenture, dated as of July 27, 1999, between the Issuer and The Chase Manhattan Bank, as Trustee (incorporated by reference to Exhibit 4.18 to the Registration Statement of Pemex Finance Ltd. and
Petróleos Mexicanos on Form F-4 filed on September 30, 1999 (registration statement no. 333-109186))                                                                                      
|             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                            

---



|Exhibit 2.17 |  | Fourth 9.03% Note Supplemental Indenture, dated as of February 10, 2000, between the Issuer and The Chase Manhattan Bank, as Trustee (incorporated by reference to exhibit 2.19 to the Registration Statement of Pemex Finance Ltd. and Petróleos
Mexicanos on Form F-4 filed on September 27, 2000 (registration statement no. 333-12614))                                                                                                
|------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 2.18 |  | Fourth 7.80% Note Supplemental Indenture, dated as of February 10, 2000, between the Issuer, MBIA Insurance Corporation, as 7.80% Note Enhancer, The Chase Manhattan Bank, as Fiscal Agent, and The Chase Manhattan Bank, as Trustee (incorporated by
reference to exhibit 2.20 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on September 27, 2000 (registration statement no. 333-12614))
|Exhibit 2.19 |  | Financial Guarantee Policy, Ambac Assurance Corporation, dated as of December 14, 1998 (incorporated by reference to Exhibit 4.26 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on September 30,
1999 (registration statement no. 333-10920))                                                                                                                                              
|Exhibit 2.20 |  | Insurance and Reimbursement Agreement, dated as of December 14, 1998, between Ambac Assurance Corporation and the Issuer (incorporated by reference to Exhibit 4.27 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on
Form F-4 filed on September 30, 1999 (registration statement no. 333-10920))                                                                                                            
|Exhibit 2.21 |  | Financial Guarantee Policy, Ambac Assurance Corporation, dated as of February 25, 1999 (incorporated by reference to Exhibit 4.28 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on September 30,
1999 (registration statement no. 333-10918))                                                                                                                                              
|Exhibit 2.22 |  | Insurance and Reimbursement Agreement, dated as of February 25, 1999, between Ambac Assurance Corporation and the Issuer (incorporated by reference to Exhibit 4.29 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on
Form F-4 filed on September 30, 1999 (registration statement no. 333-10918))                                                                                                            
|Exhibit 2.23 |  | Financial Guarantee Policy, MBIA Insurance Corporation, dated as of July 27, 1999 (incorporated by reference to Exhibit 4.28 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on September 30, 1999
(registration statement no. 333-10918))                                                                                                                                                   
|Exhibit 2.24 |  | Insurance and Reimbursement Agreement, dated as of July 27, 1999, between MBIA Insurance Corporation and the Issuer (incorporated by reference to Exhibit 4.29 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form
F-4 filed on September 30, 1999 (registration statement no. 333-10918))                                                                                                                 
|Exhibit 2.25 |  | Financial Guarantee Insurance Policy, MBIA Insurance Corporation, dated as of February 10, 2000 (incorporated by reference to exhibit 4.9 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on
September 27, 2000 (registration statement no. 333-12614))                                                                                                                                      
|Exhibit 2.26 |  | Insurance and Reimbursement Agreement, dated as of February 10, 2000, between MBIA Insurance Corporation and the Issuer (incorporated by reference to exhibit 4.10 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on
Form F-4 filed on September 27, 2000 (registration statement no. 333-12614))                                                                                                             
|             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                            

---



|Exhibit 2.27 |  | Receivables Purchase Agreement, dated as of December 1, 1998, among the Issuer, P.M.I. Comercio Internacional, S.A. de C.V., P.M.I. Services B.V., and Pemex Exploración y Producción (incorporated by reference to Exhibit 10.1 to the
Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on September 30, 1999 (registration statement no. 333-10920))                                                                                                                        
|------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 2.28 |  | Amendment to the Receivables Purchase Agreement, dated as of February 10, 2000, among the Issuer, P.M.I. Comercio Internacional, S.A. de C.V., P.M.I. Services B.V., and Pemex Exploración y Producción (incorporated by reference to
exhibit 2.34 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on September 27, 2000 (registration statement no. 333-12614))                                                                                                      
|Exhibit 2.29 |  | Servicing and Collection Agency Agreement, dated as of December 1, 1998, among the Issuer, P.M.I. Services, B.V., P.M.I. Comercio Internacional, S.A. de C.V., in its individual capacity and as Servicer, Petróleos Mexicanos, solely as
Investment Manager, and UBS AG, New York Branch as Collection Agent (incorporated by reference to Exhibit 10.2 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on September 30, 1999 (registration
statement no. 333-10920))
|Exhibit 2.30 |  | Letter Agreement, dated as of December 14, 1998, between the Issuer and Petróleos Mexicanos (incorporated by reference to Exhibit 10.3 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on
September 30, 1999 (registration statement no. 333-10920))                                                                                                                                                                                                                  
|Exhibit 2.31 |  | Letter Agreement, dated as of February 25, 1999, among Petróleos Mexicanos, the Issuer, P.M.I. Services B.V., P.M.I. Comercio Internacional, S.A. de C.V. and Pemex Exploración y Producción (incorporated by reference to Exhibit
10.4 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on September 30, 1999 (registration statement no. 333-10920))                                                                                                                 
|Exhibit 11.1 |  | Pemex Finance Limited Code of Ethics                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Exhibit 12.1 |  | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                               
|Exhibit 13.1 |  | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                              
|Exhibit 99.1 |  | Annual report on Form 20-F of Petróleos Mexicanos, for the year ended December 31, 2002, as filed with the SEC (Commission file No. 1-99) on June 27, 2003 (incorporated herein by reference)                                                                                                                                                                                                                                                                                                                       
|Exhibit 99.2 |  | U.S. Market Analysis for Mexican Crude Oil, prepared by Purvin & Gertz, Inc. (incorporated by reference to exhibit 99.6 to the Registration Statement of Pemex Finance Ltd. and Petróleos Mexicanos on Form F-4 filed on September 27, 2000
(registration statement no. 333-12614))                                                                                                                                                                                                                                 

---



PEMEX FINANCE LIMITED        AUDITED FINANCIAL STATEMENTS        DECEMBER 31, 2003 AND 2002

---





PEMEX FINANCE LIMITED        AUDITED FINANCIAL STATEMENTS        DECEMBER 31, 2003 AND 2002

INDEX

|Contents                                                |  | Page       
|------------------------------------------------------- |  | -----------
|Report of independent registered public accounting firm |  | F-3        
|Financial statements:                                   |  |            
|Balance sheets                                          |  | F-4        
|Statements of income                                    |  | F-5        
|Statements of changes in shareholder's equity           |  | F-6        
|Statements of cash flows                                |  | F-7        
|Notes to the financial statements                       |  | F-8 to F-19

F-2

---





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Mexico
City, March 5, 2004

To
the Shareholder and Board of Directors of
Pemex Finance Limited

We
have audited the accompanying balance sheets of Pemex Finance Limited (the "Company") as of December 31, 2003 and 2002, and the related statements of income, of changes in shareholder's
equity and of cash flows for the years ended December 31, 2003, 2002 and 2001, all expressed in U.S. dollars. 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 the standards of the Public Company Accounting Oversight Board (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 that they were prepared in accordance with International Accounting Standards. 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 audits provide a reasonable basis for our opinion.

In
our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Pemex Finance Limited as of December 31, 2003 and 2002, the
results of its operations and its cash flows for the years ended December 31, 2003, 2002 and 2001, in conformity with International Accounting Standards.

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

F-3

---





PEMEX FINANCE LIMITED        BALANCE SHEETS  (Notes 1 and 2)        Thousands of U.S. dollars

|                                                                      |  | December 31,
|--------------------------------------------------------------------- |  | ------------
|
|Assets                                                                |  |             
|Current assets:                                                       |  |             
|Cash and cash equivalents (Note 2)                                    |  | $           
|Liquidity account (Note 3)                                            |  |             
|Current purchased accounts receivable (Note 4)                        |  |             
|Other accounts receivable                                             |  |             
|Rights to future (ungenerated) purchased accounts receivable (Note 4) |  |             
|                                                                      |  |             
|Total current assets                                                  |  |             
|Debt issuance costsNet (Note 2)                                      |  |             
|                                                                      |  |             
|Total assets                                                          |  | $           
|                                                                      |  |             
|Liabilities                                                           |  |             
|Current liabilities:                                                  |  |             
|Current portion of long-term debt (Note 5)                            |  | $           
|Accrued interest payable (Notes 5 and 6)                              |  |             
|Deferred income from discount (Note 2)                                |  |             
|Accounts payable and accrued expenses                                 |  |             
|                                                                      |  |             
|Total current liabilities                                             |  |             
|                                                                      |  |             
|Long-term liabilities:                                                |  |             
|Long-term debt (Note 5)                                               |  |             
|Subordinated debt to PEMEX (Note 6)                                   |  |             
|                                                                      |  |             
|Total long-term liabilities                                           |  |             
|                                                                      |  |             
|Total liabilities                                                     |  |             
|                                                                      |  |             
|Shareholder's equity (Note 8)                                         |  |             
|Capital stock                                                         |  |             
|Retained earnings                                                     |  |             
|                                                                      |  |             
|Total shareholder's equity                                            |  |             
|                                                                      |  |             
|Total liabilities and shareholder's equity                            |  | $           
|                                                                      |  |             

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

F-4

---





PEMEX FINANCE LIMITED        STATEMENTS OF INCOME  (Notes 1 and 2)        Thousands of U.S. dollars

|                                                               |  | Year ended December 31, |         
|-------------------------------------------------------------- |  | ----------------------- | --------
|
|Revenues:                                                      |  |                         |         
|Income from discount on purchased accounts receivable (Note 2) |  | $                       | 455,994 
|Other income                                                   |  |                         | 2,289   
|                                                               |  |                         |         
|Total revenues                                                 |  |                         | 458,283 
|Financing costs (Notes 5 and 6)                                |  |                         | (440,379
|General and administrative expenses (Note 10)                  |  |                         | (832    
|                                                               |  |                         |         
|Net income                                                     |  | $                       | 17,072  
|                                                               |  |                         |         

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

F-5

---





PEMEX FINANCE LIMITED        STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY  FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001  (Notes 1 and 2)        Thousands of U.S. dollars

|                                 |  | Capital
stock |   | Retained
earnings |   | Total
shareholder's
equity
|-------------------------------- |  | ------------- | - | ----------------- | - | --------------------------
|Balances as of January 1, 2001   |  | $             | 1 |                   | $ | 100,794                   
|Net income                       |  |               |   |                   |   | 65,332                    
|                                 |  |               |   |                   |   |                           
|Balances as of December 31, 2001 |  |               | 1 |                   |   | 166,126                   
|Net income                       |  |               |   |                   |   | 26,006                    
|                                 |  |               |   |                   |   |                           
|Balances as of December 31, 2002 |  |               | 1 |                   |   | 192,132                   
|Net income                       |  |               |   |                   |   | 17,072                    
|                                 |  |               |   |                   |   |                           
|Balances as of December 31, 2003 |  | $             | 1 |                   | $ | 209,204                   
|                                 |  |               |   |                   |   |                           

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

F-6

---





PEMEX FINANCE LIMITED        STATEMENTS OF CASH FLOWS  (Notes 1 and 2)        Thousands of U.S. dollars

|                                                                                        |  | Year ended December 31, |            
|--------------------------------------------------------------------------------------- |  | ----------------------- | -----------
|
|Operating activities:                                                                   |  |                         |            
|Net income                                                                              |  | $                       | 17,072     
|Adjustments to reconcile net income to net cash provided by operating activities:       |  |                         |            
|Amortization of debt issuance costs                                                     |  |                         | 687        
|Change in assets and liabilities:                                                       |  |                         |            
|Current purchased accounts receivables                                                  |  |                         | 4,652      
|Other                                                                                   |  |                         | (10        
|Accounts payable and accrued expenses                                                   |  |                         | (420       
|Accrued interest payable (Notes 5 and 6)                                                |  |                         | (3,429     
|                                                                                        |  |                         |            
|Net cash provided by operating activities                                               |  |                         | 18,552     
|                                                                                        |  |                         |            
|Investing activities:                                                                   |  |                         |            
|Liquidity account (Note 3)                                                              |  |                         | (1,533     
|Collections of accounts receivable, net of discounts collected                          |  |                         | 11,472,043 
|Purchases of accounts receivable and rights to future (ungenerated) accounts receivable |  |                         | (11,193,187
|                                                                                        |  |                         |            
|Net cash provided by investing activities                                               |  |                         | 277,323    
|                                                                                        |  |                         |            
|Financing activities:                                                                   |  |                         |            
|Payments of long-term debt (Note 5)                                                     |  |                         | (328,333   
|                                                                                        |  |                         |            
|Net cash used in financing activities                                                   |  |                         | (328,333   
|                                                                                        |  |                         |            
|Cash and cash equivalents:                                                              |  |                         |            
|Net change of the year                                                                  |  |                         | (32,458    
|At the beginning of the year                                                            |  |                         | 75,756     
|                                                                                        |  |                         |            
|At the end of the year                                                                  |  | $                       | 43,298     
|                                                                                        |  |                         |            
|Supplemental cash flow information:                                                     |  |                         |            
|Interest paid                                                                           |  | $                       | 426,827    
|                                                                                        |  |                         |            

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

F-7

---





PEMEX FINANCE LIMITED        NOTES TO THE FINANCIAL STATEMENTS  DECEMBER 31, 2003 AND 2002        Amounts in thousands of U.S. dollars

NOTE 1THE COMPANY:

Pemex
Finance Limited (the "Company") was incorporated on November 18, 1998 (inception date) under the laws of the Cayman Islands, beginning operations on December 7, 1998. All of the
outstanding share capital is owned by The Pemex Finance Trust, a charitable trust created under the laws of the Cayman Islands. The Company is managed by BNP Private Bank & Trust Cayman Limited
and has no employees.

The
main objective of the Company is to transact selected financing activities outside the Cayman Islands. The Company's business is limited to the issuance of debt and the purchase of certain
accounts receivable under the Receivables Purchase Agreement ("RPA") dated as of December 1, 1998, which is summarized as follows:

Pursuant
to terms of the RPA, the Company has the right to purchase from P.M.I. Services B.V. ("Services"), an indirect wholly-owned subsidiary of Petróleos Mexicanos ("PEMEX"),
and Services has the right to purchase from P.M.I. Comercio Internacional, S. A. de C. V. ("Comercio"), a subsidiary of PEMEX, certain current and future accounts receivable ("Eligible
Receivables") generated or to be generated by the export from Mexico of crude oil to certain designated customers ("Designated
Customers"). Any Eligible Receivables that are not due and payable when purchased (at the time the purchase price is paid) will be purchased at a discount. The amount of the discount will be
determined by discounting the invoice amount of such Eligible Receivables by a rate equal to the weighted average of the yield of the Company's outstanding indebtedness (excluding the subordinated
debt to PEMEX) on the day the price for such Eligible Receivables is paid to Services plus the Specified Basis Points of 50 basis points, or, in the event of delinquencies with respect to purchased
Eligible Receivables, a greater number determined based on a specified formula under a letter agreement. PEMEX guarantees the performance of Comercio's obligations but not the payment of any Eligible
Receivables purchased by the Company (see Note 10).

All
proceeds received or to be received by the Company from Designated Customers or from any issuance of debt, including amounts contributed as capital, have been or will be used to purchase current
or future Eligible Receivables of Designated Customers from Services, to service or refinance its existing indebtedness or for general corporate purposes.

F-8

---



The
Company issued an aggregate amount of U.S. $5,000 million of notes during 2000, 1999 and 1998. The Company did not issue notes nor floating rate notes during 2003, 2002 and 2001. The net
proceeds from these issuances were used to purchase current and future Eligible Receivables under the RPA.

NOTE 2SIGNIFICANT ACCOUNTING POLICIES:

The
following is a summary of the significant accounting policies followed by the Company in the preparation of the accompanying financial statements:

F-9

---





F-10

---



F-11

---



F-12

---



NOTE 3LIQUIDITY ACCOUNT:

Under
the Fiscal and Paying Agency Agreement ("Fiscal Agency Agreement") dated as of December 1, 1998 among the Company, The JP Morgan Chase Bank, as Fiscal Agent, and The Chase Manhattan Bank
of Luxembourg, S. A., as Paying Agent, the Company is required to maintain an account with the Fiscal Agent designated as the Liquidity Account. Under the terms of the Company's long-term
notes (excluding subordinated debt to PEMEX), the cash balance and permitted investment standing to credit such account at any date, shall be at least equal to an amount, determined at such date,
equal to the sum of the next payment of debt service. At December 31, 2003 and 2002, the balance in the Liquidity Account represents cash and permitted investment standing to the credit of such
account, including interest earned on such amounts, and such balance is not considered to be cash equivalent.

NOTE 4CURRENT AND FUTURE PURCHASED ACCOUNTS RECEIVABLE:

Under
the RPA, the Company purchases Eligible Receivables of Designated Customers from Services. Future (ungenerated) purchased accounts receivable represent the purchase price paid to Services for
such receivables plus accrued discounts. Other than in limited circumstances, the Company has no recourse to or claim against Services for funds advanced toward payment of Eligible Receivables (see
Note 2 e). Services satisfies all its obligations under the RPA by delivering Eligible Receivables of Designated Customers to the Company in the order in which they are first generated by
Comercio, without regard to any concentration limit by Designated Customers.

NOTE 5LONG-TERM DEBT:

Long-term
debt as of December 31, 2003 and 2002 is summarized in the following page.

F-13

---



|                                    |  | 2003 |           | 2002
|----------------------------------- |  | ---- | --------- | ----
|December 14, 1998 issuances:        |  |      |           |     
|5.72% Notes due 2003 (1)            |  |      |           |     
|8.02% Notes due 2007                |  | $    | 350,000   |     
|6.30% Notes due 2010 (1)            |  |      | 400,000   |     
|9.15% Notes due 2018                |  |      | 250,000   |     
|                                    |  |      |           |     
|Subtotal                            |  |      | 1,000,000 |     
|                                    |  |      |           |     
|February 25, 1999 issuances:        |  |      |           |     
|6.125% Notes due 2003 (1)           |  |      |           |     
|8.450% Notes due 2007               |  |      | 108,332   |     
|6.550% Notes due 2008 (1)           |  |      | 300,000   |     
|8.875% Notes due 2010               |  |      | 200,000   |     
|Floating Rate Notes due 2014        |  |      | 100,000   |     
|                                    |  |      |           |     
|Subtotal                            |  |      | 708,332   |     
|                                    |  |      |           |     
|July 27, 1999 issuances:            |  |      |           |     
|9.69% Notes due 2009                |  |      | 600,000   |     
|7.33% Notes due 2012 (1)            |  |      | 250,000   |     
|10.61% Notes due 2017               |  |      | 200,000   |     
|9.14% Notes due 2004                |  |      | 67,500    |     
|                                    |  |      |           |     
|Subtotal                            |  |      | 1,117,500 |     
|                                    |  |      |           |     
|July 27, 1999 additional issuances: |  |      |           |     
|9.22% Notes due 2004                |  |      | 50,000    |     
|Floating Rate Notes due 2004        |  |      | 35,000    |     
|Floating Rate Notes due 2014        |  |      | 90,000    |     
|                                    |  |      |           |     
|Subtotal                            |  |      | 175,000   |     
|                                    |  |      |           |     
|February 10, 2000 issuances:        |  |      |           |     
|9.03% Notes due 2011                |  |      | 800,000   |     
|7.80% Notes due 2013 (1)            |  |      | 150,000   |     
|                                    |  |      |           |     
|Subtotal                            |  |      | 950,000   |     
|                                    |  |      |           |     
|Total debt                          |  |      | 3,950,832 |     
|Less: Current portion               |  |      | 344,755   |     
|                                    |  |      |           |     
|Total long-term debt                |  | $    | 3,606,077 |     
|                                    |  |      |           |     

F-14

---



Interest
is payable quarterly for each of these series of notes.

The
Company is subject to covenants that establish, among other things, that the Company will not incur indebtedness unless at the time of such incurrence and after application of the proceeds, the
ratio of total liabilities to equity (as defined in the Fiscal and Paying Agency Agreement, "Equity" includes the subordinated debt to PEMEX) shall not be greater than 7 to 1 and that the Company will
maintain a debt service coverage ratio of at least 3 to 1, which is calculated as the sum of: (1) the aggregate amount of quarterly payments made to the Company by obligors on the purchased
receivables, (2) capital contributions, including the proceeds of the subordinated debt, in the form of cash or permitted investments, and (3) quarterly income from permitted
investments, divided by the maximum aggregate amount of scheduled debt service. As of December 31, 2003 and 2002, the Company was in compliance with both covenants.

During
the year ended December 31, 2003, the Company paid principal amounting to U.S. $328 million (U.S. $306 million during 2002).

The
accrued interest payable as of December 31, 2003 and 2002 amounted to U.S. $40.7 million and U.S. $43.7 million, respectively.

The
annual maturities of the long-term debt outstanding for the next five years are as follows:

Year ended

|Current portion of long-term debt |  |   |          
|--------------------------------- |  | - | ---------
|2004                              |  | $ | 344,755  
|                                  |  |  
|Long-term debt                    |  |   |          
|2005                              |  |   | 340,588  
|2006                              |  |   | 460,588  
|2007                              |  |   | 523,922  
|2008                              |  |   | 515,564  
|Thereafter                        |  |   | 1,765,415
|                                  |  |  
|                                  |  |   | 3,606,077
|                                  |  |  
|                                  |  | $ | 3,950,832
|                                  |  |  

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The
estimated fair value of the Company's long term debt is as follows:

|                           |  | December 31, 2003 |           | December 31, 2002
|-------------------------- |  | ----------------- | --------- | -----------------
|
|Long-term debt             |  | $                 | 3,950,832 |                  
|                           |  |                   |           |                  
|Subordinated debt to PEMEX |  | $                 | 714,750   |                  
|                           |  |                   |           |                  

NOTE 6SUBORDINATED DEBT TO PEMEX:

In
February 2000, the Company received subordinated loan from PEMEX amounting to U.S. $135.75 million. This subordinated loan is in addition to the U.S. $125 million, U.S.
$204 million and U.S. $250 million subordinated loans received from PEMEX on February and July 1999 and December 1998, respectively.

The
Company makes payments of interest on the subordinated debt on a quarterly basis; however, all its payments of principal and of interest on the subordinated debt are made subordinated and subject
in right of payment to prior payment in full of all other indebtedness of the Company as it becomes due. Until December 31, 2001, the U.S. $135.75 million loan bore interest at LIBOR
plus 250 basis points; the U.S. $250 million and U.S. $125 million loans bore interest at LIBOR plus 300 basis points; and finally, the U.S. $204 million loan bore interest at
LIBOR plus 375 basis points. The loans have a stated maturity date of 2018, and in no event is the principal due until all principal and the respective interest on the U.S. $3,951 million notes
are paid in full.

On
January 1, 2002, the Company entered into a new subordinated debt agreement for U.S. $714,750 maturing on 2018, to consolidate the subordinated debt agreements mentioned above. Additionally,
a new procedure for calculating interest payments was established based on a rate per annum equal to the Discount Rate (as defined in the Receivables Purchase Agreement, dated as of December 1,
1998, by and among Pemex Finance, PMI Comercio Internacional, S.A. de C. V., PMI Services B. V. and Pemex Exploración y Producción) plus 300 basis points.

The
interest incurred from the subordinated loan of PEMEX for the years ended December 31, 2003, 2002 and 2001, amounted to U.S. $86.3 million, U.S. $86.1 million and U.S.
$53.3 million, respectively. The accrued interest payable as of December 31, 2003 and 2002 amounted to U.S. $10.3 million and U.S. $10.8 million, respectively. At
December 31, 2003 and 2002, the interest rate on the subordinated debt was 9.11109% and 9.05663%, respectively, plus 300 basis points.

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NOTE 7INCOME TAXES:

The
Company is exempt from taxes under the law of the Cayman Islands. No income tax was paid during the years December 31, 2003, 2002 and 2001.

NOTE 8SHAREHOLDER'S EQUITY:

The
authorized share capital of Pemex Finance Limited consists of 1,000 ordinary shares, U.S. $1.00 par value per share, all of which are issued and paid. Each share is subject to the provisions of
the Cayman Islands Companies Law (1998 Revision) and the Articles of Association. The Company has the power to redeem or purchase any of its shares, to sub-divide or consolidate the
shares, to issue all or any part of its capital whether original, redeemed, increased or reduced with or without any preference, priority or special privilege or subject to any postponements of rights
or to any conditions or restrictions whatsoever. Unless the conditions of issue shall otherwise expressly provide, every issue of shares whether Ordinary, Preferred or otherwise shall be subject to
the powers on the part of the Company herein provided.

NOTE 9COMMITMENTS AND CONTINGENCIES:

In
addition to the covenants and the events of default described in the RPA, there are certain risks and contingencies related to the Company. The ability of the Company to meet its obligations in
respect of its indebtedness depends on: (1) the ability of Comercio, operating through PEMEX, to generate sufficient Eligible Receivables of Designated Customers, which is in turn dependent
upon the existence of demand for PEMEX's crude oil, (2) any adverse change in the business or financial condition of a Designated Customer that could affect the customer's ability to make
timely payments with respect to purchased receivables, and (3) the continuing ability of the Designated Customers to purchase Mexican crude oil from Comercio. Management cannot estimate the
financial effect of these uncertainties.

Neither
Mexico, PEMEX, Comercio nor any subsidiary of PEMEX guarantees payment of the purchased Eligible Receivables.

NOTE 10SIGNIFICANT AGREEMENTS:

The
following is a summary of material provisions of the RPA and the Servicing and Collection Agency Agreement.

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