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 Business News | May 2005 
Pemex's 2005 Budget Raised To US$12 Billion
 Wire services
Petroleos Mexicanos, Mexico's state oil monopoly, was given permission to spend US455 million more than budgeted for 2005 to cover spending on maintenance and environmental cleanup, Chief Executive Luis Ramírez Corzo said.
Spending this year will climb 4 percent to US$12 billion, Ramírez said at a press conference. The government allowed Pemex to boost its budget after at least seven accidents in the last six months, including a Pemex spill of more than 5,000 barrels of crude in the Coatzacoalcos river in December.
"This is the beginning of a multi-annual process that will lead us to invest amounts never before spent by this company for prevention and remediation of the environment," Ramírez said at a press conference in Mexico City.
The accidents follow 15 years of reduced maintenance of Pemex facilities and pipelines some of which are 40 years old because high taxes don't allow the company to keep enough of its own profit for investment, Ramírez said. Mexico City-based Pemex plans to double annual spending on maintenance to US3 billion for the next three years and raise environmental spending to US513 million in 2005.
The company is spending US1.5 billion to maintain oil pipelines in 2005 and has shut down or reduced the use of 7 pipelines considered to be at risk in the southern states of Tabasco and Veracruz.
The company would need to spend more money an additional US2 billion to reduce the amount of sulfur in Mexican gasoline to 50 parts per million by 2008 from 250 parts per million now, Ramírez said.
"It's not something that's assured," Ramírez said. "We're in talks with the Finance Secretariat about budgetary assistance."
Pemex has doubled its annual investment to about US10 billion since President Vicente Fox took office at the end of 2000 and spent most of it on exploration to reverse a twodecade decline in crude reserves. To pay for the increased investments, Pemex also doubled its debt to US46 billion in the last four years.
Last year, the company had record revenue of US69 billion and paid taxes of US40.7 billion, leaving Pemex with a US1.25 billion net loss.
Ramírez said the Senate and House are likely to reconcile their version of a bill to reduce taxes on Pemex in the next session of congress that begins in September. The bill may reduce taxes as much as US2.3 billion in the first year, according to the Finance Secretariat.
"The bill has already passed the most difficult part," Ramírez said. "We are confident this will happen in the next session."
At a conference in Austin, Texas, Esteban Levin, Pemex's investor relations director, said the company may use the tax-cut proceeds to reduce debt.
"As the fiscal-regime changes come into effect, what we will eventually be doing is start paying off debt and not increasing the leverage that we have today," Levin said in a webcast of his presentation at an energy conference organized by UBS Securities LLC.
Pemex reacted quickly to the accidents with the largest spending plan ever implemented for the environment, said Alberto Cárdenas, the environmental secretary, at the press conference.
"We've advanced a lot," Cárdenas said. "It's a company with a different attitude toward the environment."
Environmental groups aren't satisfied, said Alejandro Calvillo, director of Greenpeace in Mexico. The Coatzacoalcos river in Veracruz is one of the most polluted in Latin America and many fishermen lost their livelihood because contamination has killed off fish, he said. |
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