September 7, 2009 / 10:43 PM / 8 years ago

UPDATE 1-Mexico replaces Pemex head as oil output drops

(Adds background on oil production)

MEXICO CITY, Sept 7 (Reuters) - Mexican President Felipe Calderon replaced the head of state-owned oil monopoly Pemex on Monday, a shake-up that comes as the country’s vital crude production slumps.

Mexico, a top exporter to the United States and dependent on oil sales for a chunk of government finances, has seen its oil output slide by more than a quarter since 2004 as yields drop at the aging Cantarell field and new projects prove slow to make up the gap.

Calderon said Pemex boss Jesus Reyes Heroles would be replaced by energy expert Juan Jose Suarez.

On Friday, Energy Minister Georgina Kessel said she was concerned about Pemex’s poor financial results and the company’s board was reviewing possible actions to improve the situation.

Pemex, which is state-owned but finances much of its spending on debt markets, posted a 93 percent drop in second-quarter net profit as revenues slid 30 percent due to lower crude prices and export volumes.

In his state of the nation speech last week, Calderon said he wants to see further reform in the oil industry to boost Pemex’s profitability. Calderon’s presidency is at its midpoint and he is entering budget negotiations with a newly elected Congress dominated by the opposition.

Falling oil production has put Mexico’s strained public finances under tight scrutiny. Oil revenues fund nearly 40 percent of the federal budget and two bond rating agencies have warned they may downgrade Mexico’s debt ratings due to the country’s heavy reliance on the waning oil industry. (Reporting by Adriana Barrera and Michael O‘Boyle; Editing by Diane Craft)

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