UPDATE 2-Losses wipe out equity of Mexico's Pemex

Mon Mar 1, 2010 5:00pm EST

* State oil monopoly loses $1.3 bln in fourth quarter

* Equity slides to negative 18.3 bln pesos ($1.4 bln)

* Loss improves from 2008 (Adds detail on performance by business units)

By Robert Campbell

MEXICO CITY, March 1 (Reuters) - The equity in Mexico's state oil monopoly Pemex was wiped out in the final quarter of 2009 as losses on refined product sales, lower crude output and high taxes offset higher crude prices.

Pemex [PEMX.UL] said on Monday it lost 16.6 billion pesos ($1.3 billion) in the fourth quarter of 2009, pushing the full year loss up to 46.1 billion pesos.

Pemex, one of the United States' top four suppliers of imported crude oil, said it had negative equity of 18.3 billion pesos at the end of the year.

The annual result was an improvement from 2008, when the company lost 112.1 billion pesos.

Pemex has traditionally struggled to turn a profit due to a high tax burden and inefficient, overstaffed operations. Losses on the sale of fuel in the domestic market, where prices are set below international levels, also hurt the company's bottom line.

Pemex's oil refining and marketing arm, which is the sole supplier of refined products in Mexico, racked up losses of 48.5 billion pesos last year.

The government relies on Pemex to fund about a third of the budget, forcing the company to rely on borrowing to pay for its capital investment program as it tries to reverse a five-year slide in oil production.

UPSTREAM PROFITS

Mexican oil production was down 5.3 percent in the final quarter of 2009 at 2.583 million barrels per day, compared with the same period in 2008, although the reduction in output was offset by higher oil prices, which were 53.9 percent higher.

Mexican oil production has fallen by nearly a quarter since 2004 as output from the aging giant Cantarell field has collapsed. Years of underinvestment in exploration have left Pemex with few options to reverse the trend, although government officials say they are confident output will stabilize around 2.5 million barrels per day through 2012.

Pemex's upstream oil and gas production operations reported a full year profit of 6.3 billion pesos, down from 23.5 billion pesos in 2008, largely due to lower output.

Its natural gas processing arm earned 600 million pesos, down from 2.3 billion pesos a year earlier, while its petrochemicals unit lost 18.6 billion pesos. compared with an 18.7 billion peso loss in 2008.

($1 = 13.10 pesos as of end-Dec) (Reporting by Robert Campbell; Editing by Walter Bagley)

FILED UNDER: