Mexico replaces state oil chief amid sinking prices

Mexico's president replaced the head of troubled state energy giant Pemex on Monday amid a steep fall in world oil prices that have caused the company to lose millions.

Emilio Lozoya, who has led Pemex since President Enrique Pena Nieto took office in December 2012, was succeeded by Jose Antonio Gonzalez Anaya, director of the Mexican Social Security Institute.

In a ceremony at the presidential residence, Pena Nieto instructed Gonzalez Anaya to "strengthen the finances and production (of the company) in a context of low international oil prices."

The company, which funds much of the government's budget, reported a loss of $10.2 billion in the third quarter of 2015, nearly three times worse than the same period in 2014.

Crude production has fallen steadily from a peak of 3.4 million barrels per day in 2004 to 2.2 million barrels per day late last year, partly due to fuel thefts by criminal groups.

"Adjusting its cost structure, reviewing its spending plan and strengthening its investment process through new association and investment schemes with the private sector will be necessary," Pena Nieto said.

The president signed in 2014 a landmark reform that brought private investors back to the oil and gas industry, seven decades after its nationalization.

Last year, Mexico auctioned off 30 oil and gas contracts to private investors and more sales are due this year for more lucrative deals in deep-water projects.

Gonzalez Anaya, an expert in pensions, is credited with reducing the budget deficit of the social security institute.

Jonathan Heath, a Mexican economist, said the change at Pemex reflects the need to ensure that the company remain viable in the future.

"It's a very complex process because the oil prices have fallen a lot and they're not expected to recover for a while," Heath said. "Maybe the president sees in Gonzalez Anaya someone more capable than Emilio Lozoya to achieve things."