Mexican state-owned oil and gas company Pemex has unveiled its 2016 budget, in a context of falling oil prices, making necessary a MXN 100bn (US$5.6bn) adjustment to meet its financial goal.
Pemex will seek to save MXN 28.9bn (US$1.6bn) through an efficiency and cost reduction programme (including 45% each in corporate activities and upstream, 6% in logistics, and 3% in downstream). The bulk of the cost reduction programme will be achieved through deferred investments (MXN 64.9bn or US$3.6bn), mainly in the downstream business (55% or US$2bn) and in the upstream business (42% or US$1.5bn). In the upstream business, Pemex will also cut capital expenditures and operating expenditures by MXN 6.2bn (US$346m) to adapt to the fall of oil prices from an average of US$50/bbl to US$25/bbl.
The cost reduction programme is expected to strengthen the company, which is facing MXN 147bn (US$8.2bn) of liabilities to suppliers, and will enable Pemex to adapt to new mechanisms created by the Mexican energy reform.