Mexico’s state-owned oil and natural gas monopoly plans to cut 3,000-5,000 jobs as it restructures this year, according to Energy Minister Felipe Calderon. The job cuts follow news from Petroleos Mexicanos (Pemex) earlier this month that it lost $89 million in the first quarter.

Calderon, who spoke Thursday with Mexico’s Radio Capital, said that Pemex would cut “more or less 3,000 people, probably a bit more. Pemex needs to significantly improve the way it operates; it needs to save a large part of its costs.” Pemex has 140,000 employees, and most of the cuts are expected to be non-union jobs.

Last week, Pemex said it would close three of seven administrative departments and incorporate the functions within the corporate structure to streamline operations and cut costs. The departments to be axed include Industrial Security and Environmental Protection, Strategic Planning, and Innovation and Competitiveness. Many of those losing their jobs are expected to take early retirement.

First quarter losses were blamed on higher costs and taxes, according to Pemex. The Mexican government receives about 61% of Pemex revenues in taxes. The government also takes 100% of excess revenues above a fixed crude oil price set by the Mexican Congress each year, and in the quarter, Pemex failed to benefit from surging commodity prices.

In the first quarter, Pemex drilled 25 exploration wells, a 92% increase from Q12003, and the number of development wells increased 57% to 152. Also in the first quarter, Pemex began tests at an offshore natural gas treatment facility in the Akal C complex in Cantarell, which is expected to begin operations at half of its 900 MMcf/d capacity in 2004. The facility will reach full capacity in 2005, when it will allow Pemex to cut its gas flaring to 2% of production. Flaring was 4% of total gas production in the first quarter, down from 5% year-over-year.

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