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MEXICO CITY, March 18 (Reuters) - Mexican state oil company Pemex will cut administrative expenses and contracts this year to help deal with the impact of falling oil prices, its chief executive officer said on Wednesday, adding that it will prioritize the most profitable projects.
Octavio Romero said that “all necessary adjustments” will be made to ensure that Pemex, which contributes a substantial part of the country’s budget revenues, remains financially stable.
Romero added that the company’s oil hedging program covering 2020 has already kicked in but added that it “does not solve the financial problem” stemming from the drop in oil prices on the world market.
“Pemex will strengthen its austerity measures,” he said, adding that the objective was to save the equivalent of $217 million in contract and $27 million in administrative costs this year.
Fitch Ratings rates the company’s bonds speculative grade, or junk, while Moody’s Investors Service rates them one notch above junk. All three ratings agencies have Pemex bonds on a negative outlook. (Reporting by Ana Isabel Martinez; Writing by Stefanie Eschenbacher and Julia Love Editing by Chizu Nomiyama)