Oil production decrease in Mexico, due to Pemex’s budget cut by more than $5.5 billion, will cause the states’ allocations to drop by 3 percent as compared to those planned in the Federation’s Expense Budget (PEF in Spanish) of 2016, as informed Moody’s yesterday.
“The production cutback is a negative factor for the Mexican states, which depend on budgetary allocations from the federal government,” warned the credit rating agency.
As a consequence of Pemex’s budget adjustment plan, the Mexican oil company’s output will be reduced to an average of 2.1 million barrels per day, 100,000 less than 2015, according to the company’s chief executive José Antonio González Anaya, who recently replaced Emilio Lozoya as the head of the Mexican state-productive oil company.
On February 29, González Anaya stated that the reduction would affect the production of extra heavy crude oil and unconventional oil fields, “which tend to be more expensive”, he said.
“If this drop becomes a reality, we believe that the shortage may be compensated with resources from the Fund for the Stabilization of Revenues of Federal Entities (FEIEF in Spanish), a contingency fund for state and municipal governments used in case of a decrease in allocations,” said Moody’s in its report.
The credit rating agency estimates that the FEIEF has $2.1 billion, which is 3 percent of the allocations established in the PEF 2016, or 6 percent of the ones presented in 2015.
Pemex’s chief executive stated before the Chamber of Deputies’ Political Coordination Board that the adjustment of the state-productive company was necessary, since it addresses the company’s liquidity problems.
Pemex reduced its budget 2016 by 22 percent after recording its worst losses, almost $30 billion.
Post by: Jorge Neri Bonilla