Former Mexican president Enrique Pena Nieto is being investigated over a graft scandal at the country's massive state oil company Pemex, the Wall Street Journal has reported.

The probe relates to the conduct of the firm's former chief executive Emilio Lozoya, who was arrested in Spain last week and faces extradition over claims he accepted millions of dollars in bribes.

An unnamed senior judicial official told the Journal that Lozoya's corruption "reached the highest level" and implicated Pena Nieto, who left office in late 2018.

The ex-leader could be charged as the investigation continued, according to the official quoted in the newspaper's Wednesday report.

Lozoya is wanted in Mexico for involvement in a vast corruption scandal involving Odebrecht, a Brazilian construction firm accused of paying almost a billion dollars to politicians across Latin America to win lucrative contracts.

He allegedly began taking payments from the company in 2012, when he was chief international strategist for Pena Nieto who at the time was running for president.

Part of the money was allegedly used to finance Pena Nieto's campaign. Lozoya denies the accusations against him.

Pemex is Mexico's largest firm but has been beleaguered by more than $100 billion in debt, making it one of the world's most indebted companies.

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