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Mexico's Pemex confirms that budget cuts will entail layoffs

- 19:26 - 18/02/2016
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    Mexico City, Feb 18 (EFE).- Cuts to Mexican state-owned oil company Petroleos Mexicanos' 2016 budget will entail layoffs, CEO Jose Antonio Gonzalez said Thursday.

    "Undoubtedly there will have to be personnel adjustments," Gonzalez said in an interview with leading Mexican broadcaster Televisa, although he did not indicate how many employees would be laid off.

    The company's ultimate aim is to "increase its profitability and strengthen its solvency," Pemex's CEO, who replaced Emilio Lozoya earlier this month, said of the cuts that the federal government announced Wednesday.

    The main adjustments therefore will be carried out with a view to "reducing corporate and administrative expenses" and "prioritizing investments."

    He said some of Pemex's projects were currently unviable because of low oil prices and must either be postponed or carried out in partnership with private companies, a solution made possible by a recent energy sector overhaul that ended the company's 75-year-old monopoly.

    Mexico's government announced Wednesday that 2016 public spending would be cut by 132.3 billion pesos (around $7 billion), equivalent to roughly 0.7 percent of gross domestic product (GDP), "in response to the deteriorated global scenario."

    The bulk of the cuts are to be carried out by Pemex, which will slash its budget by 100 billion pesos ($5.3 billion), the Finance Secretariat said in a statement.

    Pemex's board is expected to approve the budget cuts next week.

    Gonzalez said the cuts were necessary because Pemex's 2016 budget was prepared on the basis of an oil price of $50 a barrel, compared to $25 a barrel at present.

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