Mexico Pemex Sees $2B-$2.2B Annual Investment in Exploration

MEXICO CITY, Jun 01, 2007 (Dow Jones Newswires)

The chief executive of Mexican state oil monopoly Petroleos Mexicanos, or Pemex, said Thursday that the company expects to invest between $2 billion and $2.2 billion a year in exploration in its efforts to increase reserves.

Speaking at an event in Mexico City, Jesus Reyes Heroles reiterated Pemex's need for annual budgets of $33 billion, of which two thirds would be for capital expenditure.

The aim, he said, is to have 100% reserve replacement by 2012 or 2013, up from 41% last year, and to bring the ratio of reserves to production back above 10 years from the current 9.3 years.

As of Jan. 1, Pemex had proven reserves of 15.5 billion barrels of crude oil equivalent, down 5.8% from the year before. Of that, just over 70% was crude oil.

The company is currently producing about 3.18 million barrels a day of crude, down from 3.26 million in 2005 and 3.33 million in 2006. Crude exports are about 1.7 million barrels a day.

Pemex's crude output has been declining since reaching a record 3.38 million barrels a day in 2004, largely because of the decline in production at the giant oilfield Cantarell.

Reyes Heroles said Pemex also needs to step up refining capacity since Mexico is importing more than 30% of its gasoline needs. In the first four months of this year, Pemex imported an average of 268,000 barrels a day of gasoline, compared with 248,000 in the like 2006 period.

Gasoline production rose to 470,000 barrels a day in the period from 453,000 in the first four months of 2006, while domestic consumption was up at 738,000 barrels a day from 697,000 barrels a day.

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