Mexican state-owned oil company Pemex reported a nearly US$18 billion fourth-quarter loss on Monday after both crude output and processing slid, though the company said refining levels should rebound as major maintenance plans are completed. The company posted a 352.3bn (US$17.9bn) peso loss for the last quarter of 2017, blaming a weaker peso exchange rate and higher financing costs for its performance, according to a filing with the Mexican stock exchange.
The loss compares to a profit of some 72.6 billion Mexican pesos in the year-ago period. Maintenance at Pemex’s Ciudad Madero and Minatitlan refineries will be completed by the end of March, senior executive Josefa Casas said on a call with analysts. Boosting crude processing at both facilities should help reverse a prolonged decline in refining levels.
“Investment resources continue in the maintenance of (Pemex‘s) six refineries with the intention of not only stabilizing operations but also positively increasing crude processing margins in the production of refined products,” said Casas.
Pemex lost 151 billion pesos during the fourth quarter due to a weaker peso, the company said, which depreciated 8% against the U.S. dollar. While most of Pemex’s costs are in pesos, it sells crude oil and buys imported fuels like gasoline in dollars.
Financial costs were up 35% during the quarter, mainly because of larger indebtedness, the company said. Also weighing on the quarterly result, Pemex’s tax bill more than doubled to reach 98.8 billion pesos.
Crude oil production was down about 9% during the quarter at 1.881 million barrels per day (bpd). Total 2017 crude output averaged 1.948 million bpd, down nearly 10% compared to 2016 production, which the company said was due in large part to the natural decline of its fields.
Meanwhile, crude processing at the company’s six refineries dipped to just 574,000 bpd during the quarter despite a processing capacity of about 1.6 million bpd.
Pemex’s annual crude processing in 2017 averaged 776,000 bpd compared to 962,000 bpd in 2016. The lower level of refining activity was blamed on the impact of natural disasters, including a major earthquake, on Pemex’s Salina Cruz facility, the company’s biggest. Casas added that Pemex continues to look for partners at its Salina Cruz and Salamanca refineries, both of which need to be reconfigured to better process heavy crude.