Mexico's state-owned Pemex plans to reduce its upstream budget by 20pc in the fourth quarter, impacting short-term crude production, according to industry sources and internal documents.
Pemex's new upstream head, Nestor Martinez, has instructed the company's units to implement budget cuts in activities such as major well repairs and seismic data contracts, according to documents seen by Argus.
The company aims to save Ps26.78bn ($1.38bn) in 2024, according to an internal presentation of Pemex's upstream arm (PEP) dated 9 October. Pemex typically spends around Ps130bn quarterly, so the cut represents about 20pc of that, said an industry source.
Pemex did not respond a request for comment.
The reduction could lower Pemex's crude production by 5,804 b/d, according to the document. But the actual impact may be greater if wells go without essential repairs and stop production, sources added.
Pemex produced 1.73mn b/d of crude and condensates in August, according to hydrocarbon regulator CNH data.
This budget cut signals ongoing issues with delayed payments to Pemex vendors, which has worsened over the past six years, according to market sources. The cuts also suggest that President Claudia Sheinbaum's target of maintaining oil output below 1.8mn b/d could lead to further reductions in exploration and production spending.
As of 2 October, PEP owed around Ps99bn to suppliers, with Ps81bn for 2024 work, Ps10.5bn from 2023, and Ps1.9bn from 2022, according to an internal document sent by PEP to its units on 11 October.
In July, Pemex reported Ps126.4bn in overdue payments across all units.
Oil services companies GMS Bronco, Typhoon Offshore, Cotemar, Perforadora Integral de Orienta and Baker Hughes had the five highest outstanding balances as of 2 October, according to the internal document. Dowell Schlumberger and Halliburton de Mexico, subsidiaries of SLB and Halliburton, were among the10 companies owed the most by Pemex.
