Mexican state oil company Pemex backs down from investment announcements

Mexican state oil company Pemex slashed its budget for 2015 by nearly 12% following plunges in crude oil prices that have been sustained for the past months which means that the recent announced plans to upgrade refineries will not be carried out as announced.

“The size of the cut is such that we are deferring the execution of the most important projects including refinery reconfigurations as well as the projects of cleaner diesel and gasoline,” Pemex said.

The company explained in a statement issued February 16 that in January it was only able to obtain less than $40 per barrel whereas in its spending budget it assumed the price was going to be nearly twice as much so it was forced to make changes both to adjust revenue expectations and also to establish necessary corresponding spending limits. 

The company said the adjustment in spending is necessary because the company has binding agreements to keep a relationship between revenue and expenses.

“Given the context of international oil prices described and the budget of Petroleos Mexicanos it is necessary to take action to cut spending to meet the goals of financial balance established by Congress,” the company said.

Because of this, the company’s administrative council held a special session on February 13 where it reduced the budget by 11.5 %, the statement said.