(Bloomberg) -- Petroleos Mexicanos, the state- owned oil company, expects to increase oil production in 2008 after a three-year decline, even as output at its largest field drops as much as 18 percent this year.

Overall production may rise to 3.1 million barrels a day this year, said Carlos Morales, director of exploration and production for Pemex, as the Mexico City-based company is known, during a fourth-quarter conference call today. Pemex's production was 3.08 million barrels a day in 2007.


The company's overall budget for next year will rise 28 percent to a record 218 billion pesos ($20.3 billion). Eighty- four percent is earmarked for exploration and production.

Pemex said the spending will help them boost production to 3.1 million barrels, a goal that Chief Executive Jesus Reyes Heroles set for the next five years. Most of the money will finance drilling new wells in the onshore Chicontepec field.