Pemex plans to slash US$1.3bn from E&P budget

Mexico's heavily indebted national oil company Pemex plans to cut 26.7bn pesos (US$1.3bn) from the budget of its exploration and production subsidiary, according to reports in local media.

The cuts to Pemex Exploración y Producción (PEP) would be applied in the last three months of 2024. 

The cost reductions are being proposed by Nestor Martínez Romero, who became director of PEP when President Claudia Sheinbaum's new government took office on October 1.

Pemex did not reply to a request from BNamericas for further information.

Savings are being targeted in areas such as drilling, extraction and maintenance. PEP also plans to delay the acquisition of seismic data until 2025.

The aim is to "prioritize well interventions based on value creation," the document reads.

Small impact on output

The cost cuts will reduce Pemex's output of crude oil and condensates by an estimated 5,800b/d. 

Pemex's current daily production stands at around 1.8Mb/d, down from 2.5Mb/d in 2014.

The company is laboring under a debt burden of nearly US$100bn, made a US$14bn loss in Q2 and relies on government support to meet its obligations to creditors.

New Pemex CEO Víctor Rodríguez Padilla, appointed by Sheinbaum, has pledged to stabilize the company's finances while diversifying into new business areas such as renewable energy and lithium mining.

Plans for 2024-30

BNamericas accessed a Pemex presentation detailing its plans for PEP for 2024-30.

According to that presentation, Pemex aims to reverse the decrease in its hydrocarbons output and replace 100% of its proven reserves every year thanks to new discoveries.

It will step up its cost reduction efforts, optimize its portfolio of projects and implement partnerships with the private sector at its less profitable oil and gas fields.

Pemex will carry out a strategic assessment of mature fields and fields that are not being exploited or where performance can be improved.

The company will also design new business lines such as lithium, electricity cogeneration, wind power and biofuels.

The complete presentation, in Spanish, can be accessed in the Documents box in the top-right corner.