(Bloomberg) -- Mexico’s state oil company is promising to slash greenhouse gas emissions to reach net zero by 2050, an ambitious goal for the indebted oil producer as it struggles to turn around flagging production and reduce its massive debt burden.

Petroleos Mexicanos said it would cut methane emissions by 30% over the next six years as it aims to reduce its total emissions to net zero by 2050, according to a company sustainability plan released Wednesday night.

Pemex is also promising to stop all gas flaring by 2030, improve its emissions monitoring process and reduce its water use. The company says it will need to invest as much as 12% of its capital expenditure to meet its emissions reductions target from 2025 through 2030.

Pemex’s board of directors approved the environmental, social and governance plan earlier this month, paving the way for ESG investors to potentially return to the indebted oil producer.

“The plan establishes the company’s commitment toward ethical and sustainable production, and reinforces Pemex’s role as an agent of change in the nation’s energy sector when it comes to climate action,” chief executive officer Octavio Romero wrote in the document. 

Read More: Pemex Approves Emissions Plan, Opening Door to ESG Investors 

The plan, which has been in development for the past year, aims to help Pemex meet the requirements of some funds that have been limiting exposure to the company’s bonds because of its ESG record, especially as a growing number of banks and investors are demanding companies mitigate practices that are harmful to the planet.

Pemex’s reputation has been marred by a host of mishaps over the past few years, including two massive methane leaks, a deadly offshore platform accident and a gas explosion that set the Gulf of Mexico ablaze. 

The company, the world’s most indebted oil firm, is in desperate need of financing as it tries to reinvigorate production that has dwindled to about half its output from two decades ago, as well as reduce its roughly $106 billion debt burden.

The plan was also was also a condition for some banks to renew revolving credit lines that are up for renegotiation later this year.

Here are some other highlights of the plan:

  • Pemex will seek to reduce water use and curb sulfur emissions
  • Pemex will improve its greenhouse gas emissions monitoring process and begin a program to quantify methane emissions
  • Pemex to publish annual report on sustainability progress and will provide periodic updates alongside earnings
  • Business opportunities analyzed in the sustainability plan include EV charging stations and green hydrogen imports

--With assistance from Jose Orozco and Amy Stillman.

©2024 Bloomberg L.P.