Mexico's state-run Pemex has spent 38% of its exploration and production budget during the first half of this year as the company struggles to reverse declining oil production.

Pemex said today it had spent 88 billion pesos (US$6.4 billion) on oil and natural gas exploration, field development, infrastructure and maintenance throughout the country's oil and natural gas areas.

In January Pemex announced a $16.9 billion exploration and production budget for the year, a Dow Jones newswire report said.

Mexico's average oil output fell 7.9% during the first five months of this year to 2.65 million barrels per day, below Pemex's target of 2.7 million bpd for this year.

During the first half Pemex invested 43 billion pesos in offshore oil reservoirs, and 45 billion pesos on land.

Pemex's largest projects for this year are the Chicontepec oil basin on land in northern Mexico, the giant Cantarell offshore oilfield where output is down 35% on year, and the Ku Maloob Zaap offshore field that has replaced Cantarell as Mexico's largest producer.

During a May conference call Pemex Chief Financial Officer Esteban Levin said the depreciation of the peso would make it difficult to meet the ambitious $20 billion investment target for the year, a 10% increase from the $18 billion Pemex invested last year.

To compensate for the fall in the peso, Pemex said it had requested additional funds from the Finance Ministry.

A large portion of Pemex's costs, such as oil rig rentals, are in US dollars.

Pemex calculated an exchange rate of 11.70 pesos when it set this year’s budget.

Today, the peso was quoted in Mexico City as trading at 13.55 pesos to the US dollar.