The board of Petroleos Mexicanos (Pemex) has approved a $4-billion budget reduction for 2015, an 11.5% decrease compared with the previous expenditure program authorized by Mexico’s Congress.
Pemex says the cuts, which come amid lower oil prices, are imperative in achieving financial targets set by Congress.
Two thirds of the company’s $36.3 billion budget—$24.6 billion—will be allocated toward the company’s investment plans. The remaining one third will go toward operating activities and meeting labor and pension obligations.
Pemex says its budget formulation process considered a $79/bbl average price for the Mexican crude oil export basket to estimate annual revenues and to set a corresponding ceiling on expenditures.
Deferred spending for downstream activities includes refinery revamps and clean fuels projects involving ultra-low sulfur gasoline and diesel (OGJ Online, Feb. 18, 2015). The board has instructed management to meet with contractors and renegotiate long-term deals that were made during different market conditions.
Following comprehensive energy reform, Pemex plans to proceed with bidding for blocks in the nation’s shallow waters as interest from international firms remains despite lower oil prices (OGJ Online, Dec. 19, 2014).