March 3 (Bloomberg) -- Petroleos Mexicanos, the state-owned oil company, may seek as much as $10.5 billion in financing this year to pay for record spending on exploration and production.

As much as $6 billion may come from issuing debt in local and international markets, $2.5 billion in loans from financial institutions and $2 billion in loans from export-import agencies, Chief Financial Officer Esteban Levin said today on a conference call with analysts, without giving a time frame.

Pemex, as the company is known, plans to spend $19.5 billion this year on exploration, refining and chemicals production to offset the fastest decline in oil output since 1942. Competitors such as Petroleo Brasileiro SA, Brazil’s state-controlled producer, are entering debt markets after a 73 percent plunge in oil prices since a July record eroded profit.

“The idea is to raise net debt to $2.5 billion to $3 billion this year,” Levin said on the call.

Total debt fell 6.3 percent in 2008 to $43.2 billion, the company said. About 16 percent of it was in Mexican pesos.

Pemex has 91.2 billion pesos in debt maturing within 12 months.

The peso fell 20 percent against the dollar in the fourth quarter, contributing to Pemex’s fourth-quarter net loss of $7.5 billion. Pemex took foreign-exchange losses on debt denominated in foreign currency as the peso lost ground against the dollar.

Pemex sold $2 billion of 10-year notes at 8.25 percent in January to “test the waters,” Chief Executive Officer Jesus Reyes Heroles said last month. The bonds sold at more than 200 basis points above notes sold by Mexico in December.

Pemex registered to sell 70 billion pesos ($4.6 billion) of local bonds during the next five years.

Falling Production

Company output fell 9.2 percent to 2.799 million barrels a day in 2008, costing Pemex $20 billion in lost sales, according to the Energy Ministry. Daily production will be 2.7 million barrels to 2.8 million barrels this year, the company said.

Production at Cantarell may fall to 700,000 barrels a day in 2009 and 400,000 barrels during the period of 2009 to 2017, the company said. The field, the third-largest field in the world when it began operating in 1979, once accounted for about 65 percent of Mexico’s oil output.

Pemex pumped 772,000 barrels of oil from Cantarell in January, down 38 percent from a year earlier and more than twice as fast as government estimates.

Oil for April delivery rose 31 cents, or 0.77 percent, to $40.46 a barrel at 2 p.m. on the New York Mercantile Exchange.

To contact the reporter on this story: Andres R. Martinez in Mexico City at amartinez28@bloomberg.net;

Last Updated: March 3, 2009 15:08 EST