Mexico’s next president Andres Manuel Lopez Obrador will allocate 75 billion pesos ($3.9 billion) in the budget next year to oil extraction in a bid to resuscitate flagging output.
“We are going to allocate budget resources, we are going to make an effort to adjust current spending in order to have more public spending and from the private sector,” said Lopez Obrador on Saturday, according to a statement on his website. “Most of it will go to the energy sector next year. We want to invest 75 billion pesos in extraction, in addition to the 65 billion pesos.”
His proposed 75 billion pesos of spending is equivalent to about 44 percent of Pemex’s budget for oil exploration and production this year. He didn’t specify what the 65 billion pesos was allocated for. His government will spend 50 billion pesos on existing refineries and 50 billion pesos for the startup of a new one, he said to oil industry members on Sept. 8 in a meeting in Villahermosa, Tabasco, that included his pick for Pemex Chief Executive Officer Octavio Romero and Rocio Nahle, Mexico’s next energy minister.
The new government will call for bids for oil service contracts as soon as Lopez Obrador takes office at the start of December, along with the announcement of his strategy to revitalize oil production, he said.
There will be “zero tolerance” for corruption in the energy sector and clear rules. “We have to simplify the procedures so that we can honestly but agilely untangle everything that prevents us from producing, extracting oil,” he said. He will also seek to improve technology to produce more energy.
© 2018 Bloomberg L.P