Emilio Lozoya, the CEO of Petróleos Mexicanos (Mexican Petroleums—Pemex), announced Wednesday that some of the company’s deep water exploration projects would be put on hold due to the declining prices of crude oil. In addition to scaling back on research projects, Lozoya said that job cuts would also be part of a spending cut of over $4.16 billion dollars approved by Pemex’s board of directors last week.
The price of oil has dropped drastically in the last year. Although crude prices averaged at $86 dollars a barrel in 2014, prices fell from a high of $100 dollars a barrel in June of last year to a mere $40 dollars in January of this year. This week prices were slightly up at $50.57 dollars a barrel, a price considered $25 dollars below the amount needed to make such deep water exploration projects profitable. “The exploration of some deep water deposits, especially the riskier ones and those that have not yet begun will be suspended,” said Lozoya.
Pemex, which is the seventh largest oil producer in the world, has been rocked by a number of changes over the past year. In August of 2014 the administration of President Enrique Peña Nieto succeeded in passing an energy reform bill to break-up the Pemex oil monopoly, awarding foreign companies oil contracts for the first time in Mexico since 1938. The oil giant has also had to deal with illegal tapping of its petrol and diesel pipelines, costing the company over $1 billion dollars.