Mexicos 2010 Budget Plan Sees 2.5MB/D Crude Output

Mexico’s oil production may fall 4.9 percent next year as the nation faces the greatest “fiscal shock” in 30 years, said Finance Minister Agustin Carstens told a Senate committee today.

Lower output is costing the nation as much as 300 billion pesos ($23.05 billion) in lost sales annually and may create a deficit in the federal budget next year, Carstens said. Oil revenue funded 38 percent of the government’s budget last year.

Mexico’s economy, the second-largest in Latin America, may have shrunk as much as 10.4 percent in the second quarter as remittances, foreign direct investment and exports fell, according to a

government report last month. Standard & Poor’s in May placed Mexico’s credit rating on negative outlook as the government struggles to narrow its fiscal deficit.

“We are going to face a huge hurdle to pass a budget that maintains the stimulus with less government revenue,” Carstens said.

State-owned oil company Petroleos Mexicanos on July 30 cut its production forecast to 2.65 million barrels a day for this year, from an earlier estimate of as much as 2.8 million. Carstens said Pemex may pump 2.5 million barrels a day next year and output would keep falling through 2012.

mexico oil :http://www.bloomberg.com/apps/news?pid=20601086&sid=aPGPhD5VddqI