July 26, 2013 / 1:45 PM / 4 years ago

UPDATE 3-Mexico's Pemex posts bigger loss in second quarter

By Gabriel Stargardter

MEXICO CITY, July 26 (Reuters) - Mexican state oil monopoly Pemex on Friday posted its steepest loss since 2011, hurt by lower crude export prices and a stronger peso.

Pemex posted a loss of 49 billion pesos ($3.8 billion) in the second quarter compared with a year earlier loss of 33.6 billion ($2.6 billion), according to a statement. It was the company's biggest loss since the third quarter of 2011.

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.

Carlos Morales, head of Pemex's exploration and production arm, said in a conference call with analysts that the company would still be able to reach a goal of lifting production slightly to 2.541 million bpd by the end of the 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.

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.

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

REFORM

Oil prices have fallen since last year and the peso has strengthened against the dollar, crimping the company's revenues as measured in Mexican currency.

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 the 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 to attract big investors, which would be a major departure for Mexico.

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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