(Adds Pena Nieto confirmation, quotes, details on cabinet shakeup)
By Gabriel Stargardter and Ana Isabel Martinez
MEXICO CITY, Feb 8 (Reuters) - Mexican President Enrique Pena Nieto on Monday removed Emilio Lozoya, the head of ailing state-oil firm Pemex, replacing him with the country's social security chief whom he tasked with cutting costs amid a global oil rout.
A close ally of Pena Nieto, Lozoya became Pemex CEO in December 2012, overseeing the company during a momentous energy reform that ended Pemex's decades-long monopoly over the country's oil and gas sectors.
However, his term coincided with a sharp fall in the price of oil, which, along with years of declining production, has led to record losses and drastic cost-cutting measures.
"I've given instructions to the new director to make the efficiency and profitability of all Pemex's activities his top priority, with an emphasis on its international competitiveness," Pena Nieto said at a press conference in Mexico City.
"It will be necessary to adjust the cost structure, revise the spending program and strengthen the investment processes, making use of the new joint venture and investment schemes provided by the energy reform."
Pemex's new boss, Jose Antonio Gonzalez, has been the director of Mexico's Social Security Institute since 2012. Mikel Arriola, the head of health regulator Cofepris, will replace him, Pena Nieto said.
Mexican Finance Minster Luis Videgaray, who is said to have had a frosty relationship with Lozoya, said on Monday that Pemex's board would announce fresh budget cuts in the coming days due to the slump in oil prices.
Raul Munoz, who was the head of Pemex from 2000 to 2004, said the news may ultimately come as a relief to Lozoya, given the turbulent position Pemex currently is in.
"Now he can breathe a bit better," he said. "(The job) is very difficult, very difficult."
As part of a wider cabinet shakeup, Pena Nieto also announced that Jose Narro, the former rector of the National Autonomous University of Mexico (UNAM), will become health minister, replacing Mercedes Juan. (Additional reporting by Dave Graham; Editing by Tom Brown, Bernard Orr)