Mexico is forced to reduce crude oil production targets for 2021 in its new budget plan

In the new budget plan, the state-owned Petroleos Mexicanos, known as Pemex, is expected to lower its crude oil production targets for 2021 due to continuing troubles at the company (according to Bloomberg’s sources). And it expected the company’s production target of 2.027 million barrels per day to continue next year.

In the first seven months of 2020, Pemex produced an average of 1.692 million barrels of crude oil per day. With lower selling prices, the production shortfall has reduced the government’s oil revenues to only 56% of target. The Mexican President Mexican President Andrés Manuel López Obrador says that the next budget will be “the most complicated one in nearly 100 years in the modern history of our country, due to the Corona epidemic.”

Mexican Finance Minister Arturo Herrera said that oil exports in the budget are valued at $ 40 a barrel, which is 22% less than what it was in 2020.

Mexico has already been struggling to reverse the decline in oil production over the past 15 years and is also struggling to reduce the debt of $ 107 billion, the highest of any major oil company. However, the Coronavirus pandemic lowered oil prices to record levels in April 2020, which dealt a severe blow to the company and the Mexican economy in general. The problems have been further complicated by heavy tax burdens, losses in refining, and a project to build a new $ 8 billion plant in the president’s home state.

It is worth noting that Pemex’s credit rating has been steadily declining by Moody’s Investors Service and Fitch Ratings, pushing the company’s bonds into negative area.