Mexico's Net Oil Revenue Falls Short of Forecast

Efe Monday, June 02, 2008


Mexico's net oil revenues in the first quarter fell short of what the government projected in its 2008 budget, the finance ministry said, citing as contributing factors the soaring price of imported gasoline, smaller-than-expected export volume and the peso's rise against the dollar.

Despite the international situation of high oil prices, the ministry said that oil income between January and March was 212.9 Related Products

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billion pesos ($20.47 billion), 8.49 billion pesos ($816 million) below the official projection.

"If, during the period, there had been an increase in the oil price alone, keeping unchanged the rest of the variables, there would have been greater income by some 33.2 billion pesos ($3.19 billion) because the observed price was 40.2 percent higher than the estimated one," the finance ministry said.

The ministry noted that gasoline imports cost nearly $1.79 billion more than had been forecast.

Though a net oil exporter and the No. 3 supplier of crude to the United States, Mexico is forced to import gasoline because of a shortage of refining capacity.

The volume of oil exports was also 11.8 percent below the budget projection, representing a loss of $1.49 billion.

To that must be added the appreciation of the peso against the dollar, the ministry said, "meaning that for each dollar earned fewer pesos are obtained, which - together with lower income for other reasons - translated into 7.7 billion pesos ($740 million)" less than forecast.

The communique was released by the ministry after leftist leader Cuauhtemoc Cardenas criticized the government this week after learning that there would not be an oil revenue surplus.

State-run Petroleos Mexicanos has a monopoly over the country's oil and gas sector, and Pemex revenues fund a big portion of federal government spending.

Under a revenue-sharing arrangement, revenues exceeding budget projections are distributed to Mexico's 31 states and the Federal District. With oil income falling short of the target, the states will get no extra money.

The finance ministry rejected the idea that its oil calculations were "false" or "deceptive," the words used by Cardenas to describe the official figures.

Regarding the deficit in petroleum income, the government of leftist-led Mexico City announced that it asked for an "urgent meeting" with Pemex representatives to analyze why this situation had arisen.

"It's paradoxical that during the period in which we have the highest oil price in history as well as an also historically high level of total sales, the firm has a negative result," said municipal Finance Secretary Mario Delgado Carrillo in a communique.

Mexico's Congress is currently debating rightist President Felipe Calderon's proposal to give Pemex broad financial and managerial autonomy and exempt the firm from some government rules on procurement and outsourcing.

While Calderon insists he has no intention of privatizing Pemex, some contend the bonuses the company would be permitted to offer private contractors represented a disguised form of profit-sharing aimed at opening the door to privatization.

Prior to the start of an historic 71-day debate in Congress on the government's bill, polling firm Consulta Mitofsky published a survey showing that 61 percent of Mexicans think Calderon's initiative is aimed at privatizing all or part of the energy sector.

Pemex, created after President Lazaro Cardenas - father of Cuauhtemoc - nationalized Mexico's oil industry in 1938, accounts for roughly 38 percent of Mexican government revenues, and managers have long complained that the firm's heavy fiscal burden prevents it from expanding its exploration and extraction capacity.

The company has also been treated as a cash cow by successive governments, especially during the 71-year reign of the Institutional Revolutionary Party, or PRI, which channeled tens of millions of dollars in Pemex funds to its failed 2000 presidential campaign.

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