Mexico purchased put options that give it the right, not the
obligation, to sell 228 million barrels of oil for an average of $76.40 a
barrel next year, Videgaray told reporters in Mexico City today. While
the government’s 2015 revenue plan estimates $79 a barrel on its crude
exports, the country could cover the difference with its oil rainy-day
fund, he said.
With the options contracts and the oil fund, Mexico is “100 percent protected,” Videgaray said.
Mexico traditionally hedges most of its expected crude exports for
the following year. The Finance Ministry estimates Mexico will export
1.09 million barrels a day in 2015, or 398 million barrels for the year.
The government has allocated 7.94 billion pesos ($584 million) to
complement the hedges if needed.
These instruments will allow the government to meet the objective
of the revenue portion of the public budget, Marco Oviedo, chief Mexico
economist at Barclay’s Plc., said in a research note today. “This
confirms that Mexico’s public finances will not be exposed to lower oil
prices during 2015,” Oviedo said.
WTI for December delivery declined $2.97, or 3.9 percent, to $74.21
a barrel on the New York Mercantile Exchange, the lowest settlement
since Sept. 21, 2010.
The government bought the hedges from seven financial companies
through 43 contracts. Videgaray declined to identify the counterparties.
Mexico won’t exercise oil hedges for this year, he said.
State-owned Petroleos Mexicanos, which has posted losses eight
straight quarters as crude output tumbles, funds about a third of the
federal budget.
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