More money: Pemex asks for larger budget
Pemex asks for budget increase
Mexico's state-owned Pemex is asking the government for a 20% increase in this year’s budget after the peso dropped dramatically in value on the global financial crisis.
Pemex's head of exploration and production Carlos Morales Gil said 60% of the company's budget was in dollars, hurting the bottom line.
"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," Morales said at a news conference.
Mexico's peso hit a 16-year low in March but has since climbed 18% on hopes the recession is finding a bottom, said a Reuters report.
The company plans to invest nearly $19.5 billion this year, mostly in its oil and gas production business.
The proposed increase in pesos would allow Pemex to maintain its planned level of spending.
Morales said that the increase in the exploration and production portion alone of the budget could reach 20 billion pesos.
The capital spending programme assumed an exchange rate of 11.7 pesos per dollar but the currency's sharp fall against the dollar since October has cut into the state-owned monopoly's spending power. The peso closed at 13.13 per dollar yesterday.
Pemex is spending heavily this year to try to offset the decline of the Cantarell field, which pumped only 713,000 barrels per day in April, down 35% from a year earlier.
The slide in production at Cantarell and a lack of major new discoveries has reduced Mexican oil exports to their lowest level outside hurricane season since 1990 and poses a major threat to the federal budget, which relies on oil revenues to fund more than a third of spending.
Mexico's finance ministry controls Pemex's budget although the company is slated to gradually receive more financial autonomy under legislation enacted late last year.