OREANDA-NEWS. The Mexican government is weighing a financial lifeline for state-owned Pemex to help see the company through the oil price slump, declining production and a historic transition into a competitive environment.

"The Federal Government supports and will always support" Pemex, finance minister Luis Videgaray said at a Mexico City conference yesterday. The government is "discussing options with the company to show this financial support that the company needs."

But the government of president Enrique Pena Nieto is asking Pemex to cut costs and make adjustments. "The company at the same time has to face with responsibility the context and challenges….it should review its costs, adjust its spending program and be more efficient."

Videgaray added that Pemex should use the country?s energy reform by fully partnering with the private sector, concentrating on profitable activities and leaving to others what it cannot do profitably, "the same process that other oil companies in the world are going through."

Anemic oil prices have exacerbated the revenue impact of long-declining Mexican oil production, a trend the government hopes its energy reform will eventually reverse.

Pemex produced 2.275mn b/d of crude in December 2015, down by 3.3pc from the same month a year ago, according to the latest company data issued late yesterday.

December crude output was off slightly from the previous month of November.

Crude production averaged 2.267mn b/d in 2015, compared with 2.429mn b/d in 2014.

Overall liquids output, including NGLs, averaged 2.578mn b/d in December, a 4.7pc decrease from December 2014.

Last month?s liquids production was flat with November 2015.

Pemex exported 1.008mn b/d of crude last month, an 18.5pc decline from a year earlier, with more supply delivered to Asia-Pacific and less to the Americas and European markets.

The company?s average export price in December 2015 was $28.68/bl, compared with $50.98/bl in December 2014. The average price for 2015 was $43.29/bl, down from $85.48/bl in the previous year.

Credit rating agency Moody's said on 21 January it had placed Pemex on review for downgrade, along with four other Latin American oil companies, citing the lowest oil prices in more than a decade.

Lower ratings translate into higher borrowing costs.