Pemex would cut 45,500 million pesos from its budget
Pemex reported that it preliminary plans to cut 45.5 billion pesos from its spending budget for 2020.
Given the recent and continuing impact of the COVID-19 pandemic on the company‘s business and the global economy, Pemex management hopes to propose amendments to its 2020 budget to the Board of Directors.
These amendments are expected to reflect the anticipated impact on their cash flows of the following developments: decreases in crude oil and oil prices and production, additional support from the Mexican government in the form of contributions and tax benefits, and changes in the type of US dollar-peso exchange rate.
Likewise, the amendments are expected to represent approximately a reduction of 5,000 million pesos in operating expenses and a decrease of 40,500 million pesos in production capital expenses (including non-capitalizable maintenance expenses).
Once the Board of Directors approves the amendment budget, it will be required to present it to the Ministry of Finance and Public Credit for approval as part of its authority over Pemex’s objective of financial balance for the fiscal year.
However, this budget information does not reflect any potential changes, as they are subject to final approval by the company’s Board of Directors to date.
Pemex and its expenses
The company’s 2020 budget includes a total of 332.6 billion pesos for capital expenses, including 94.1 billion for non-capitalizable maintenance and 41.3 billion for the construction of its new Dos Bocas refinery, managed by PTI Infraestructura de Desarrollo, S.A. de C.V.
Pemex’s net capital expenditure budget is 197,200 million pesos. The company expects to direct $ 175.7 billion (or 89.1%) for exploration and production programs in 2020.
This investment in exploration and production activities reflects Pemex’s focus on maximizing the potential of its hydrocarbon reserves and its most productive projects.
In addition, in 2020 it expects to direct 17,000 million pesos (or 8.6%) to its industrial transformation segment.
The company reviews its capital expenditures portfolio in accordance with its current and future business plans.
