State oil monopoly Petroleos Mexicanos said Friday it will increase investment in oil exploration, production and refining by 28 percent this year, amid projections that output will drop dramatically at its largest oil field.
Investment will total about 220 billion pesos (US$20 billion; euro13.2 billion), compared to 170 billion pesos (US$16 billion (euro10.5 billion) in 2007, finance director Esteban Levin said during a conference call with analysts.
"This a historical high in terms of Petroleos Mexicanos' investment spending," Levin said.
Pemex, as the company is known, will invest about 84 percent of the money in exploration and production and 11 percent in refining, he said.
Pemex's production levels have been falling steadily _ including a 5.3 percent drop in 2007 to a daily average of just over 3 million barrels _ primarily due to declining output at its biggest-yielding oil field, Cantarell.
Cantarell's output will drop by as much as 20 percent this year as the field matures, ranging from 1.2 million to 1.3 million barrels a day compared with an average of 1.5 million in 2007, exploration and production director Carlos Morales Gil told analysts.
Morales said Pemex will be able to stem that decline as soon as the company finishes installing new production equipment. Investment in the field should reach US$5 billion (euro3.3 billion) this year, Energy Department officials have said.
Pemex still expects overall production to average 3.1 million barrels a day this year, Morales said, as other fields offset declines at Cantarell.
Experts believe there is much more oil to be found in deep waters of the Gulf of Mexico, but the company has said repeatedly it does not have the money or expertise to explore and extract it.
Mexican Energy Secretary Georgina Kessel said recently the government is working on an energy reform proposal that would let Pemex form partnerships with private companies, mostly foreign.
But the idea is anathema to many Mexicans _ and bitterly opposed by the country's principal leftist opposition party, which accuses President Felipe Calderon of intending to privatize Pemex.
Former Democratic Revolution Party presidential candidate Andres Manuel Lopez Obrador has threatened to lead massive, disruptive, nationwide protests against the reform.
Mexico nationalized its oil industry on March 18, 1938, a day commemorated each year with great patriotic fanfare. The constitution bans most private and foreign involvement in the industry, although Pemex subcontracts some work to private firms.