MOSCOW (MRC) -- Higher tax payments and foreign exchange losses pushed Mexico's Petroleos Mexicanos back into the red in the third quarter, even as crude production recovered somewhat, reported Reuters with reference to the state oil company's statement last week.
Pemex lost 62.8 billion pesos (USD3 billion) compared to a profit of 1.4 billion pesos in the same period last year, and it was also a setback compared to the second quarter, when Pemex logged a net profit of 14.4 billion pesos.
Still, new oil fields in operation since 2019 produced 280,000 barrels per day (bpd), helping to lift average output to 1.74 million bpd in the quarter, Pemex said. Crude processing was up 15% year-on-year in the quarter to 695,000 bpd.
"The timid increase in crude production has not been substantial enough to improve their outlook," said Arturo Carranza, director of energy projects at Akza Consultores.
"Internal factors, like its excessive tax burden, had a negative impact. External factors, like the fluctuation of the dollar versus the peso, also increased costs."
Pemex has the largest tax obligations of any company in Mexico and contributes some 16% to state coffers. Foreign exchange losses were 47 billion pesos for the third quarter, in which Pemex reported revenues of 732.1 billion pesos (USD35.5 billion).
Pemex's financial debt, much of which is issued in dollar-denominated bonds and held widely by investors around the world, stood at USD113 billion. Between October and December, USD1.557 billion in debt repayments are due, the company said.
Alberto Vazquez, chief financial officer, said the company had not ruled out tapping bond markets in 2022, and was in constant talks with the finance ministry. President Andres Manuel Lopez Obrador has pledged to revive Pemex and has pumped billions of dollars in financial support for the company. But some financial experts say it is not enough.
"Instead of seeking to further reduce Pemex taxes, they should reduce their operational and financial burden to bring it in line with that of private upstream companies," said Emily Medina, a fellow at the Energy Policy Research Foundation.
Medina said Mexico should also lower costs in projects like the president's new Dos Bocas refinery, seek efficiency gains and prioritize investment in profitable areas. Lopez Obrador has moved aggressively to strengthen the state's role in the energy sector via Pemex, whose fortunes contrast with those of Brazil's Petroleo Brasileiro (Petrobras), which President Jair Bolsonaro is considering privatizing.
As MRC wrote previously, in September 2021, Brazilian petrochemical producer Braskem said its Mexican subsidiary Braskem Idesa ha reached a new gas supply agreement with Pemex to settle differences between the companies and build a USD400 million ethane terminal.
Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,638,370 tonnes in the first eight months of 2021, up by 10% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 989,570 tonnes in the first eight months of 2021, up by 30% year on year. Deliveries of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased, whereas shipments of injection moulding PP random copolymers decreased significantly.
Petroleos Mexicanos (Pemex) is a Mexican state-owned oil and gas and petrochemical company. Since the nationalization of the Mexican oil industry in 1938, Pemex has remained a state-owned company and, by law, has exclusive rights to explore and produce oil in the country. Almost 60% of the company's revenues go to the state budget. Petrochemical products include, but are not limited to, polyethylene, polyvinyl chloride.