Mexico’s state oil firm Pemex on Monday announced it is putting on hold around $2.6bn worth of projects, including ones involving offshore drilling, because the price of oil has fallen so low.
It plans to cut around $5.5bn from its budget this year and a substantial amount of that saving will come as it delays deepwater exploration projects. Other savings will come from implementing efficiencies.
Company CEO Jose Antonio Gonzalez Anaya, who was appointed to the post on February 8 by national president Enrique Pena Nieto, said he expects the oil price to drop more in the coming months. As of Monday it was around $27 per barrel and Gonzalez Anaya is entertaining $25 per barrel as a likelihood.
Pemex has massive debts of around $74bn and it has been reforming its energy sector in an effort to improve productivity.
Among the reforms has been a loosening of Pemex’s monopoly grip on oil production combined with attempts to bring in outside players.
Monday’s announcement of deferred projects reflects a much more cautious approach than was seen on Friday when Mexico’s oil industry regulator CNH announced that it will proceed with plans to auction 10 deepwater oil blocks in the Gulf of Mexico with a December 5 cutoff date for proposals.
That was in spite of mixed enthusiasm for take-up of previous auctions.