Pemex seeks larger budget to offset exchange rate

Mexico's Pemex is negotiating with the government to increase its exploration budget by $1.53 billion due to the 30% decline of the peso against the US dollar.

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, May 27 -- Mexico's state-owned Petroleos Mexicanos (Pemex) is negotiating with the government to increase its exploration budget by 20 billion pesos ($1.53 billion) due to the 30% decline of the peso against the US dollar.

"Pemex has an important part of its expenses in dollars…the exchange rate slide that we have seen means that our original budget has distortions," said Pemex exploration director Carlos Morales Gil.

The requested funds would account for about 20% of Pemex's exploration budget, said Morales Gil, who expressed optimism the government would grant the additional funds, which he considers essential for the company.

Morales Gil, who noted Pemex's initial 2009 spending plan projected an exchange rate level of 11.7 pesos per dollar compared with the current 13.1 pesos per dollar, said the state firm is working with the ministry of finance to clarify the situation.

"We believe we are going to manage this in the next few weeks or days even, so we can have a budget set to the exchange rate that is going to be in effect all year," he said.

Meanwhile he said Pemex estimates Mexico has 53 billion bbl of potential reserves, most of it offshore in the Gulf of Mexico. "That's where 80% of what we have to look for is. We clearly know where we have to do it," said Morales Gil.

"These discoveries [in the GoM] were made at a time when we need to replace reserves and try to sustain the level of production," he said, noting that production in January-April 2009 was 2.66 million b/d or 6.89% lower than in the same period last year.

Nonetheless, he said Pemex this year expects to add 1.05 billion bbl to its reserves, which total more than 14 billion bbl of crude. Last year, he said, the state firm added 1.4 billion bbl to its reserves.

Earlier this month, Pemex inaugurated its new board of directors, adding four newly created positions and raising the number of its members to 15 in line with national oil policy reforms enacted last year (OGJ Online, May 19, 2009).

Contact Eric Watkins at hippalus@yahoo.com.

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