| MEXICO CITY, Sept 8
MEXICO CITY, Sept 8 The Mexican government
proposed on Wednesday a 2011 investment budget for state oil
monopoly Pemex that was more than 30 percent below what the
company had said earlier this year it would need.
The government of President Felipe Calderon proposed Pemex
[PEMX.UL] be allotted 286.3 billion pesos ($22.2 bln) for
capital spending in 2011, up 9 percent from 2010 but well short
of the 376 billion pesos the company wanted.
Pemex is facing mounting capital investment needs as it
plans to build a new oil refinery near Mexico City and seeks to
develop new oil fields that would replace aging giants like
Cantarell that supply the bulk of Mexican oil output.
The finance ministry, in its 2011 budget proposal submitted
to Congress, did not explain why Pemex received less than it
had said it would need.
Pemex's finances have deteriorated significantly in recent
years as it has relied heavily on borrowing to fund its capital
The company's equity was wiped out last year by its growing
debt load. It also faces a soaring pension plan deficit.
Mexican oil production fell by nearly 25 percent between
2004 and 2009 due as yields at Cantarell tumbled. Although
output has been stabilized at about 2.55 million barrels per
day, the long-term future of the world's No. 7 oil producer
Pemex hopes to award contracts to redevelop marginal oil
fields to private companies as part of a plan to bolster crude
output. The government on Wednesday proposed reductions in
taxes for these marginal fields in order to bolster their
attractiveness to potential investors.
(Reporting by Robert Campbell; editing by Missy Ryan, Gary