In his fourth State of the Nation address earlier this month, Mexican President Vicente Fox said the state-owned Petroleos Mexicanos (Pemex) will require $8.7 billion a year through 2010 to keep up with the country’s growing natural gas and electricity needs.

In 2005, Pemex is forecasting that it will produce 7 Bcf/d of natural gas, 4 million bbl/d of crude and 1.6 million bbl/d of refined products. Pemex, ranked sixth worldwide for proved and probable reserves, also is working to increase its oil and gas reserves recovery rate to 75% next year from its current 45%.

Pemex’s 2002-2010 business plan is designed to “transform the state oil company into a modern and integrated oil company that practices sustainable development while focusing on increasing growth, added value and competition,” Fox said.

“The start-up of 23 new power stations and three associated works guarantees the supply of the energy that will be needed in this decade,” he said. “In four years, we have increased the country’s generating capacity by 32.1%, equal to the consumption of the entire Mexico City metropolitan area.”

Fox said his administration is “developing the most extensive investment program in decades. Thus, we are increasing production capacity and the reserve replacement rate. We have cut oil and gas imports by 47%. We have recovered more than 4 billion pesos with the operation against thefts of fuel from Pemex. We are breaking away from criminal practices that for years harmed public wealth.”

Between January and August, Pemex’s gas production increased 2% to 4.5 Bcf/d, while crude production increased 1% to 3.38 million bbl/d. Non-associated gas production fell 3%, and refined products output was flat at 1.6 million bbl/d. Meanwhile, reserve replacement was 45%. Pemex’s upstream division plans to drill 1,018 wells this year, which would be up 71.7% from 2003.

Fox submitted the proposed 2005 budget, which is 6% higher than this year’s plan, to Congress on Wednesday. It proposes an investment of $10.6 billion for Pemex in 2005, which would be below the expected $12.2 billion to be spent by the end of this year. Oil and related fees and taxes account for about a third of federal revenue, but the government expects it to be down about 10% over this year because it expects world oil prices to be lower.

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