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Sec Response letter

 [LETTERHEAD OF CLEARY GOTTLIEB STEEN & HAMILTON LLP]

 Writer's Direct Dial: (212) 225-2575

 E-Mail: gbinder@cgsh.com

 August
24, 2005

 H. Roger Schwall

 Assistant Director

 Division of Corporation Finance

 Securities and Exchange Commission

 450 Fifth Street, N.W.

 Washington, D.C. 20549

Re:
Petróleos Mexicanos

Form 20-F for Fiscal Year Ended December 31, 2004

Filed June 30, 2005, File No. 0-00099

 Dear Mr. Schwall:

 By letter dated August 11, 2005, the staff of the Securities and Exchange Commission (the “Staff”) provided certain comments on Petróleos
Mexicanos’ annual report on Form 20-F for the fiscal year ended December 31, 2004 (the “Form 20-F”), which was filed with the Commission on June 30, 2005. In response to your comments and on behalf of Petróleos Mexicanos, we
have prepared the responses below, along with supplementary information contained in the Annexes to this letter.

 For convenience, we have reproduced below in italics the Staff’s comments and have provided responses immediately below the comments. Based on the
responses set forth in this letter, including the undertakings concerning future filings of Petróleos Mexicanos on Form 20-F, we believe it will not be necessary to amend the Form 20-F. We would be happy to discuss this point after the Staff
has reviewed the responses below.

  H. Roger Schwall, Esq., p.
 2

 Form 20-F

 Recently Issued Accounting Standards, page 125

1.
Please expand your disclosure to explain how the adoption of these standards impacted your reconciliation to US GAAP. Additionally, we note that you will adopt certain provisions
of D-3 “Labor Obligations” as of January 1, 2005 regarding severance payments paid to employees upon dismissal. Please explain the nature of these costs, how the amounts to be accrued are determined and whether or not the adoption is
expected to result in a reconciling difference to US GAAP and why.

 PEMEX acknowledges the Staff’s comments.

 With respect to the adoption of Bulletin B-7 “Business Acquisition,” we note that none of Petróleos Mexicanos, its subsidiary entities or its consolidated subsidiary companies (collectively,
“PEMEX”) acquired any businesses during fiscal year 2004. As a result, the adoption of this bulletin did not have any impact under Mexican GAAP or on the reconciliation of PEMEX’s financial statements to U.S. GAAP for the year ended
December 31, 2004.

 With respect to Bulletin C-10,
“Derivative Financial Instruments and Hedge Operations,” this bulletin was adopted by PEMEX on January 1, 2005. For U.S. GAAP purposes, PEMEX has applied SFAS No. 133, “Accounting for Derivative Instruments and Hedging
Instruments,” as amended (SFAS No. 133), which, among other things, requires that certain derivative instruments embedded in other contracts be recognized in the balance sheet as assets or liabilities at their fair values and that changes to
fair values be recognized immediately in earnings, unless the derivative qualifies as a “hedge” (as defined in SFAS No. 133). At December 31, 2004, for Mexican GAAP purposes, under Bulletin C-2, “Financial Instruments,” PEMEX was
not required to recognize the value of certain embedded derivative instruments under Mexican GAAP. Recognition of such instruments will be required following the adoption of Bulletin C-10, which is more closely aligned to SFAS No. 133. Since the
treatment of these embedded derivative instruments will be substantially the same under both U.S. GAAP and Mexican GAAP, the nature and amount of the adjustments necessary to reconcile both income and equity to U.S. GAAP will be significantly
reduced for the year ended December 31, 2005.

 With respect to
the adoption of Bulletin D-3, “Labor Obligations,” as disclosed, certain provisions of this bulletin became effective in 2004—specifically those provisions related to the accounting treatment and disclosure of post-retirement medical
and other benefits. These provisions of Bulletin D-3 aligned Mexican GAAP more closely with U.S. GAAP, for which PEMEX has historically applied SFAS No. 106, “Employers’ Accounting for Post-Retirement Benefits Other Than Pensions.”
However, as disclosed on page F-43 of the Form 20-F, the different implementation dates of Bulletin D-3 and SFAS No. 106 by PEMEX resulted in a reconciling item and will continue to require a reconciling item in the future.

  H. Roger Schwall, Esq., p.
 3

 As disclosed on page 125 of the Form 20-F, effective January 1, 2005, certain provisions of Bulletin
D-3 became effective. These provisions related to additional valuation and disclosure requirements with respect to amounts payable to employees on involuntary dismissal, which are commonly referred to as “severance payments.” Historically,
severance payments represented a contingent labor benefit liability estimable only upon dismissal. The amount of the severance payment varies based on an employee’s accrued seniority at PEMEX and consists of five months of an employee’s
standard salary, plus 20 days of salary per year for each year of service, plus a seniority premium, which consists of 20 days of salary for each year of service provided. For purposes of computing this benefit, an employee’s standard daily
salary is increased by the pro rata portion of the supplemental payments payable in respect of gas and basic food supplies. Prior to the adoption of Bulletin D-3 in 2005, for both Mexican GAAP and U.S. GAAP purposes, this estimated liability has not
been recognized. Under Mexican GAAP, PEMEX expects that this estimated liability will be approximately Ps. 1.38 billion. PEMEX is currently evaluating whether the provision of Bulletin D-3 which goes into effect in 2005 will create a difference with
respect to U.S. GAAP. PEMEX understands that this issue is also being addressed by the American Institute of Certified Public Accountants (AICPA) International Practices Task Force in its recent meetings and that no definitive conclusion has yet
been reached on this issue.

 Related party
transaction, page 150

2.
We note that you offer salary advances to employees and executive officers. Please expand your disclosure to comply with Item 7.B of Form 20-F.

 PEMEX acknowledges the Staff’s comment, and proposes to modify the
disclosure as requested in Petróleos Mexicanos’ future filings on Form 20-F, to include the largest aggregate amount outstanding during the period covered, which during 2004 was Ps. 20.5 million. We have supplementally provided in Annex
A a revised version of this portion of the Form 20-F, demonstrating such modification.

 Controls and procedures, page 169

3.
We note that you state there were no significant changes in your internal control over financial reporting or in other factors that could have materially affected these controls
subsequent to the date of their evaluation. However, Item 15(d) of Form 20-F requires that you disclose any change in your “internal control over financial reporting” identified in connection with the evaluation required by paragraph (d)
of Exchange Act Rules 13a-15 or 15d-15 that occurred during the period that has “materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.” Please revise your
disclosure accordingly.

  H. Roger Schwall, Esq., p.
 4

 PEMEX acknowledges the Staff’s comment, and proposes to modify the disclosure as requested in
Petróleos Mexicanos’ future filings on Form 20-F to indicate that there has been no change in PEMEX’s internal control over financial reporting during 2004 that has materially affected, or is reasonably likely to materially affect,
its internal control over financial reporting. We have supplementally provided in Annex B a revised version of this portion of the Form 20-F, demonstrating such modification.

 Financial statements

 Note 19. Differences between Mexican GAAP and US GAAP, page F-39

 (a) Exploration and drilling costs, page F-42

4.
Please clarify which costs are amortized on a units of production basis over total proved reserves. We note your disclosure on page F-88 that you have no property acquisition
costs because you exploit the oil reserves owned by the Mexican nation. Please explain why it is appropriate to amortize costs other than acquisition costs of proved properties over proved reserves. Please address both US and Mexican GAAP in your
response. Refer to paragraphs 30 and 35 of SFAS 19 for US GAAP.

 PEMEX acknowledges the Staff’s comment. For purposes of U.S. GAAP, pursuant to paragraph 35 of SFAS 19, “Financial Accounting and Reporting by Oil and Gas Producing Companies” (SFAS No. 19), the
amortization of capitalized exploratory drilling and development costs must be computed on the basis of the total estimated units of proved developed reserves, rather than on a total proved reserves basis, which is the basis for amortizing
acquisition costs of proved properties as outlined in paragraph 30 of SFAS No. 19.

 PEMEX confirms to the Staff that its capitalized exploratory drilling and development costs, for both Mexican and U.S. GAAP purposes, are amortized on the basis of the total estimated units of proved developed
reserves, not over total proved reserves. We acknowledge that the disclosure on page F-11 should have stated “proved developed reserves,” rather than “total proven reserves.” We also acknowledge that the disclosure on page F-42
should have stated “proved developed reserves” rather than “total proven reserves.” We propose to modify the disclosure in Petróleos Mexicanos’ future filings on Form 20-F to indicate that the amortization of
capitalized exploratory drilling and development costs is computed on the basis of the total estimated units of proved developed reserves, rather than on the basis of all proved reserves.

5.
 We note your disclosure on page F-87 of capitalized costs of oil and gas producing activities that are classified as construction work in progress. Please
clarify the nature of these costs and explain how you account for the amortization and depreciation of

  H. Roger Schwall, Esq., p.
 5

development costs incurred in connection with a planned group of development wells before all of the planned wells have been drilled. Please address both
US and Mexican GAAP in your response. Refer to paragraph 35 of SFAS 19 for US GAAP.

 PEMEX acknowledges the Staff’s comment, and notes that the capitalized costs of oil and gas producing activities classified as construction work in
progress refers to only development and exploration costs (e.g., the cost of platforms, wells and pipelines) that have not yet been completed. Such capitalized costs are not amortized or depreciated until the construction has been completed
and the properties begin producing. The accumulated depreciation and amortization costs disclosed on page F-87 refers only to capitalized costs of completed properties.

 For purposes of U.S. GAAP, according to paragraph 35 of SFAS No. 19, if significant development costs are incurred in
connection with a planned group of development wells before all the planned wells have been drilled, it is necessary to exclude a portion of those development costs in determining the unit-of-production amortization rate until additional development
wells are drilled. PEMEX confirms that it complies with these provisions of SFAS No. 19, for both Mexican and U.S. GAAP purposes, and includes only proved developed reserves relating to completed wells in computing the amortization rate. Moreover,
PEMEX does not anticipate future development costs in computing the amortization rate.

6.
We note your disclosure on page F-14 that cost of sales included the depreciation, and amortization expense associated with the assets used in operations, as well as costs
associated with inventory. Please clarify whether or not, for US GAAP, inventory costs include depreciation, depletion and amortization and that it was allocated to inventory at the time the inventory was produced.

 PEMEX confirms that for U.S. GAAP purposes, a portion of the depreciation,
depletion and amortization expenses associated with the assets used in the production is considered in determining its cost of inventory. This inclusion is reflected as part of the item “Profit in inventory” (adjustment k) in the
reconciliation of income and equity to U.S. GAAP. PEMEX notes that the allocation of the depreciation, depletion and amortization expenses to the ending inventory is done as of the end of each reporting period when U.S. GAAP information is reported.

 (g) Fixed assets – Impairment, page
F-45

7.
We note your disclosure on page F-44 that under Mexican GAAP you capitalize realized gains and losses arising from hedging instruments designated as cash flow hedges as part of
capitalized interest. Please tell us whether or not the fair value or expected cash flows from hedging instruments are considered in your asset impairment under Mexican GAAP. Refer to paragraph 27 of SFAS 133 for US GAAP.

  H. Roger Schwall, Esq., p.
 6

 PEMEX supplementally informs the Staff that the fair value or expected cash flows from hedging
instruments are not considered in PEMEX’s asset impairment under Mexican GAAP. Under Mexican GAAP, paragraph 41 of Bulletin C-15, “Impairment of the Value of Long-Lived Assets and their Disposal,” states that future or expected cash
flows should not incorporate any income or expense related to financing activities. Paragraph 41 of Bulletin C-15 is similar to the corresponding provisions of U.S. GAAP, contained in paragraph 27 of SFAS No. 133. SFAS No. 133 states that
“… because the hedging instrument is recognized separately as an asset or liability, its fair value or expected cash flows shall not be considered in applying those impairment requirements to the hedged asset or liability.” Therefore,
the hedging instruments designated as cash flow hedges were not considered in PEMEX’s asset-impairment tests under either Mexican or U.S. GAAP.

 Engineering Comments

 Note 22. Supplemental Information on oil and gas exploration and production activities (unaudited), page F-87

 Crude Oil and Natural Gas Reserves (Unaudited), page F-89

8.
We note your statement that your reserves are “estimated by PEMEX’s petroleum engineers.” However on page 94 you reference “audits by independent
engineers.” Please clarify this discrepancy to us and identify any independent engineers utilized.

 PEMEX acknowledges the Staff’s comment. We will delete references to “audits by independent engineers” in Petróleos Mexicanos’
future filings on Form 20-F. As noted on page F-89, Mexico’s proved reserves are estimated by the petroleum engineers of Pemex-Exploration and Production and all data relating to proved reserves in Petróleos Mexicanos’ Form 20-F is
derived from these estimates by these petroleum engineers. PEMEX supplementally advises the Staff that, since 1996, its reserve calculations have been reviewed by internationally recognized external consultants through a process that includes the
independent evaluation of the original volume in place and the associated hydrocarbon reserve. In 2005, PEMEX retained three independent firms, each of which was asked to review the reserves of a separate region for a total of approximately 100% of
the proved reserves; this process is expected to conclude during the third quarter of 2005. The reference to “audits by independent engineers” on page 94 referred to this process of review by these consultants. However, since this review
has not yet been concluded, we should not have included a reference to this audit in the Form 20-F.

  H. Roger Schwall, Esq., p.
 7

 Standardized Measure of Discounted Future Net Cash Flows Related to Proved Oil and Gas Reserves
(unaudited), page F-90

9.
Please remove the subtotal future cash flows before tax, as this subtotal is not contemplated by SFAS 69 under US GAAP. Refer to paragraph 30 and Illustration 5 of SFAS
69.

 P