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Weekly Report - 3 February 2011 (WR-11-05)

TRACKING TRENDS

MEXICO | Pemex's financial loses. The state oil company Pemex posted financial losses of M$57.9bn (US$4.8bn) in 2010, an 80% increase on the M$32.7bn (US$2.7bn) reported in 2009. The losses are almost the size of Pemex's 151,000 employee payroll reported as MS$65.5bn (US$5.45bn). Curiously, Pemex still posted a positive trade balance of M$235bn (US$19.5bn), with sales up 19% on the previous year. This is because while Pemex's production has been steadily decreasing the price of oil in international markets has been increasing sharply; the price of Brent reached US$100 per barrel this week, the highest level in 28 months. This pushed the Mexican oil blend to US$87.39 per barrel, the first price increase of the year. Pemex's losses can be attributed to two main factors. The first pertains to the high level of taxes that the state-owned company has to pay to the government. According to the company's statement in 2010, it paid M$765.4bn (US$63.7bn) to the state, 28% up on 2009.
Pemex estimates that this means it paid M$0.54 for each peso of hydrocarbon fuels and derivatives sold throughout the year. Still more problematically for the government and the company another recent report estimated losses to illegal extraction from 610 clandestine oil pumping stations in the period ranging from January to May 2010 at M$14.4bn (US$1.2bn). It is now believed that part of the contraband operation is run by the Zetas drug gang with the collaboration of Pemex employees. The contraband fuel is extracted directly from the company's pipelines and then smuggled to the US or Central America where it is sold illegally. The issue gained national relevance in December 2010 when an oil pipe from which oil was illegally extracted, exploded in San Martí­n Texmelucan, Puebla. Pemex was found to be responsible for the incident. Although no figures were disclosed the company issued a statement on 20 January explaining that it had paid for all the repairs to the material damages caused; and compensation to the families of 28 of the 30 people killed by the blast.

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