Mexico oil giant to announce job cuts as it tries to slim down

By ANDREA NAVARRO on 12/24/2015

MEXICO CITY, Mexico (Bloomberg) -- Petroleos Mexicanos hopes to start 2016 with a plan to become leaner and more efficient.

The state-owned oil producer is set to announce job cuts for next year as part of the plan to restructure the company and to synchronize itself to industry standards, interim CFO Rodolfo Campos said in a phone interview Wednesday. Campos didn’t specify how many jobs would be lost.

"This is an addition to other tools to slowly align the company to industry metrics," Campos said. The company had more than 153,000 employees at the end of 2014, according to an annual report.

The company’s overall strategy is to form partnerships along the entire production chain, he said. "We’re looking for private capital to develop our business plan in addition to the tools we already had," Campos said, referring to bond issuance. Pemex’s capital spending budget for next year was cut by 73 billion pesos ($4.4 billion) to 293 billion pesos, the lowest allocated since 2007.

Joint Ventures

The company is focusing on upstream partnerships, or farm- outs, to improve output in mature fields and areas where the company lacks the ability or capital to maximize production. Pemex, which was hoping these joint ventures would be in place this year, now expects to announce and carry them out during 2016, Campos said, declining to comment on a more specific timeline. "The entire proposal is being re-designed" due to market conditions, he said.

Oil production at Pemex in 2015 will drop to the lowest in 25 years as a series of accidents and budgetcuts curbed supply. The company is nearing $100 billion in debt and recently posted a record loss of about $10.2 billion in the third quarter.

Former CFO Mario Beauregard stepped down on Nov. 13, weeks after the company reported the record loss. Juan Pablo Newman, the adjunct financial director of Mexico’s Nacional Financiera development bank, known as Nafinsa, will replace Beauregard on Jan. 1, according to an e-mailed statement from Pemex. Campos, Pemex’s Treasurer, is serving as the interim CFO.

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