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Mexico’s Pemex reports narrower quarterly loss, growing fuel sales

Mexican state oil company Pemex on Friday reported its third quarter net loss narrowed to $2.58 billion (52.0 billion pesos), but said it had suffered from increased sales costs as well as currency exchange losses as the peso weakened against the dollar.

The results contrasted sharply with international oil majors like Exxon Mobil and Chevron, which posted blockbuster profits during the same period at a time of high crude prices.

Pemex, officially known as Petroleos Mexicanos, saw revenue grow to 602 billion pesos in the July-to-September period, helped by an increase in domestic fuel sales and crude exports plus higher oil prices, which were up around 29% compared to the year-ago period.

Its year-earlier net loss totaled 77.2 billion pesos.

The Mexican oil giant’s financial debt stood at $105 billion during the quarter, down about 3% from $108 billion a year earlier.

Crude oil output rose slightly to average 1.764 million barrels per day (bpd) in the quarter.

In a filing with the Mexican stock exchange, Pemex noted currency exchange losses for the quarter totaling 9.3 billion pesos, as the peso weakened 1.6% against the dollar, but the company stressed this did not represent a significant hit to cash flow.

President Andres Manuel Lopez Obrador has pumped in billions of dollars to support the company to fulfill his pledge of growing domestic production of motor fuels by refining more of Pemex’s crude oil production at home during his term.

On a call with analysts shortly after the results, Pemex’s Chief Financial Officer Carlos Cortes hailed progress on growing domestic refining and fuel sales.

“Pemex has been replenishing its participation in the national fuel market,” he said, noting that during the third quarter domestic fuel sales grew by nearly 70% year on year.

Pemex’s domestic oil refining in the third quarter rose more than 16% to hit 807,000 bpd.

For the first nine months of this year, Pemex reported a 17% rise in gasoline sales in Mexico while domestic diesel sales were nearly 47% higher, according to a company presentation, part of its goal to reclaim market share from private competitors.

Susana Cazorla, a director at energy consultancy SICEnrgy, said that despite the reported improvements in crude processing, Pemex remained unable to completely meet domestic demand.

“It was not enough to supply its gasoline and diesel market – almost two thirds of its sales in the third quarter of 2022 were imported products,” she said after comparing separate import data, referring to the company’s continuing reliance on imported gasoline and diesel shipments mostly from U.S. suppliers.

Oil production costs for Pemex this year rose by about a quarter to $18.38 a barrel, compared to average costs last year, due to an increase in contributions to state coffers, Chief Executive Octavio Romero said earlier this week.

In recent months, Pemex also faced increased scrutiny of its environmental record after scientists detected two massive methane leaks in December and August from one of its largest offshore fields in the Gulf of Mexico.

Pemex disputed the volume of methane released into the atmosphere but did not report the incident despite what experts said was a legal obligation to do so.

Lopez Obrador formally opened a major oil refinery in July, a signature project for the leftist leader who argues it will help the country cut its dependence on foreign gasoline and diesel supplies. But officials said it will not start production until next year.
Source: Reuters (Reporting by Ana Isabel Martinez and Adriana Barrera; Additional reporting by Noe Torres and Stefanie Eschenbacher; Writing by David Alire Garcia; Editing by Christian Plumb, Deepa Babington, Kirsten Donovan)

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