Pemex Keeps Ambitious Investment Budget for 2009

MEXICO CITY (Dow Jones Newswires), Jul. 6, 2009

Mexican state oil monopoly Petroleos Mexicanos has already covered a "great part" of its financing needs for 2009 and will maintain its ambitious investment budget for this year, according to a report published on the company's website.

Pemex, as the company is known, boosted capital expenditures to $18 billion last year in an effort to reverse declining oil production, and plans to lift the figure to over $20 billion this year.

The company has issued $2 billion in foreign debt and 10 billion pesos ($758 million) in the local market so far this year.

"With these issuances, Pemex has covered a great part of its 2009 financing program, thus having the flexibility to search for the best market opportunities during the remainder of the year," said Pemex in its 2008 annual report.

Pemex is also seeking additional funds from the finance ministry to compensate for the depreciation of the peso. Pemex calculated an exchange rate of MXN11.70 when it set its MXN239 billion investment budget for this year.

With the peso trading at MXN13.25, the company is negotiating with the finance ministry for an additional MXN20 billion to compensate for the peso fall and stick to the spending target.

"Despite weakness in prices and the current state of the worldwide economy, Pemex will maintain its 2009 investment level," said the company.

Mexican oil production fell 9.2% last year, and oil exports will disappear in around six years if the trend continues, putting Mexico at risk of a fiscal crisis. More than a third of government revenue comes from oil.  

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