Pemex to Announce Job Cuts With Oil Production at 25-Year Low
(Bloomberg) -- Petroleos Mexicanos plans to cut jobs next year after posting a record loss and seeing oil production fall to a 25-year low.
The state-owned oil producer is set to announce the staff reduction as part of the plan to restructure the company and to synchronize itself to industry standards, interim Chief Financial Officer Rodolfo Campos said in a phone interview Wednesday.
Mexico is opening its energy industry to foreign companies for the first time in decades to help stem a persistent decline in production at a time when falling prices are already reducing income. Oil output at Pemex in 2015 will drop to the lowest since at least 1990 as a series of accidents and budget cuts curbed supply. The company is nearing $100 billion in debt and recently posted a record loss of about $10.2 billion in the third quarter.
"This is an addition to other tools to slowly align the company to industry metrics," Campos said. The company had more than 153,000 employees at the end of 2014, according to an annual report. Campos didn’t specify how many jobs would be lost.
The company’s overall strategy is to form partnerships along the entire production chain, he said. "We’re looking for private capital to develop our business plan in addition to the tools we already had," Campos said, referring to bond issuance. Pemex’s capital spending budget for next year was cut by 73 billion pesos ($4.4 billion) to 293 billion pesos, the lowest allocated since 2007.
The company is focusing on upstream partnerships, or farm- outs, to improve output in mature fields and areas where the company lacks the ability or capital to maximize production. Pemex, which was hoping these joint ventures would be in place this year, now expects to announce and carry them out during 2016, Campos said, declining to comment on a more specific timeline. "The entire proposal is being re-designed" due to market conditions, he said.
Pemex’s output is set to drop 6.7 percent from 2014, falling for an eleventh straight year. Production is more than 100,000 barrels a day below the original 2.4 million forecast for the year by Chief Executive Officer Emilio Lozoya.
Former Chief Financial Officer Mario Beauregard stepped down on Nov. 13, weeks after the company reported the record loss. Juan Pablo Newman, the adjunct financial director of Mexico’s Nacional Financiera development bank, known as Nafinsa, will replace Beauregard on Jan. 1, according to an e-mailed statement from Pemex.
To contact the reporters on this story: Andrea Navarro in Mexico City at firstname.lastname@example.org; Adam Williams in Mexico City at email@example.com To contact the editors responsible for this story: David Marino at firstname.lastname@example.org Richard Stubbe.
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