Mexico senator eyes deal with Brazil's Petrobras

MEXICO CITY, Aug 22 (Reuters) – An alliance between Mexican oil monopoly Pemex and Brazil’s Petrobras would be an “important and fundamental” way to help boost Mexico’s flagging output, a ruling party senator said in a newspaper report published on Saturday.

Last week, Mexican President Felipe Calderon said during a trip to Brazil he was interested in a deal with Petrobras to help increase both countries’ oil production.

The output of Brazil’s Petrobras (PETR4.SA) has surged in recent years while Mexico’s Pemex has struggled with declining production and shrinking reserves.

Falling oil production poses a big threat to the Mexican government’s finances, which rely on oil taxes to fund nearly 40 percent of the federal budget.

Reuters