Pemex slated to get new boss as budget cuts bite
OREANDA-NEWS. February 10, 2016. Mexico's state-run Pemex chief executive Emilio Lozoya is expected to be replaced today as part of a series of senior government appointments.
Lozoya?s departure would coincide with a prolonged oil price slump and deep financial turmoil at the company.
It is not confirmed who will take the helm at Pemex, which reported a historic \\$10bn loss in third quarter 2015. Fourth quarter earnings are scheduled to be released on 26 February.
Whoever takes over would usher through this year?s long-awaited tender for deepwater Gulf of Mexico acreage coveted by major oil companies.
A close ally of Mexico's president Enrique Pe?a Nieto, Lozoya oversaw the implementation of a sweeping energy reform enacted in 2014, ending Pemex?s 75-year monopoly and encouraging the entry of private-sector investment.
Lozoya?s departure "is practically a fact," a senior Pemex executive told Argus today.
Mexico's finance secretary Luis Videgary Caso confirmed today that the government slashed 73bn pesos (\\$3.9bn) from Pemex's 2016 budget, and about 16,000 Pemex employees will be let go.
On the recommendation of Mexican central bank president Agust?n Carstens Carstens, the government will make yet another adjustment to this year's budget, "starting with Pemex," Videgary said.
"The adjustment will have to be accompanied by a preventive adjustment for 2017, given the oil price environment, which will generate fewer resources for federal spending," Videgary said.
The size of the cutback must be agreed upon by the members of Pemex's board.
The president's office has called a press conference for this afternoon, but the subject has not been confirmed.
Videgaray said public spending for 2016 is protected by a \\$49/bl hedging program negotiated last year at a total cost of \\$1.09bn.
He confirmed that Mexico will seek to reach a similar agreement for 2017. Hedging negotiations usually begin around June and end in October.