Mexico's Pemex Posts Sharp Loss in Second Quarter



Reuters

MEXICO CITY, July 26 (Reuters) - Mexican state oil monopoly Pemex on Friday posted a loss of 49 billion pesos ($3.8 billion) in the second quarter, widening its losses from the same period a year earlier on lower crude export prices and a stronger peso.

The announcement comes just weeks before the government is due to unveil a plan for a major overhaul of the oil industry aimed at attracting more private capital.

Pemex, a symbol of Mexican self-sufficiency since the industry was nationalized in 1938, is struggling to reverse a decline in crude output, which has fallen by a quarter since peaking at 3.4 million barrels per day in 2004.

Pemex said it pumped an average 2.52 million barrels per day (bpd) over the April-June period, down 1.1 percent from the same period last year.

Mexico's government relies heavily on oil revenues that fund around a third of the federal budget, and Pemex often operates at a loss due to a heavy tax burden.

In addition, the peso has strengthened against the dollar compared, helping dampen the company's revenues as measured in Mexican currency.

Mexico is a major exporter to the United States, but has to import nearly half of its gasoline due to a lack of domestic refining capacity.

During the second quarter of last year, Pemex registered a loss of 33.6 billion pesos.

Revenues during the April-June period were 393.2 billion pesos, the company said, down 3.2 percent from last year.

Earlier this week a top Mexican lawmaker said the proposal to overhaul Pemex will be presented next month, with President Enrique Pena Nieto favoring constitutional reform that would allow private investment into Mexico's state-controlled energy sector.

David Penchyna, leader of the Senate's energy committee and a member of Pena Nieto's Institutional Revolutionary Party (PRI), said he favors allowing concessions over production-sharing contracts.

Though Pemex is allowed to contract out to third-parties for a wide variety of oilfield services, payment for work as a percentage of production or profits is strictly prohibited by the existing legal framework - an obstacle many believe is strangling Mexico's oil and gas production.



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