Losses wipe out equity of Mexico's Pemex

MEXICO CITY (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 119.5 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.

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.

Reporting by Robert Campbell; editing by Leslie Gevirtz