Surge in crude price casts doubt on Mexico’s plan to end oil exports

By Jacob Sanchez

Mexico City, Aug 8 (EFE).- The Mexican government has set a goal of ending petroleum exports in 2023, but the current spike in crude prices has generated a bonanza for the state-owned oil company that may prove difficult to give up.

Petroleos Mexicanos (Pemex) reported $16.75 billion in profits for the first six months of this year, an increase of 54 percent over the same period in 2021 even though the volume of exports fell 5 percent to 5.68 million barrels.

The firm posted a net profit of $12.7 billion, compared with a loss of $1.15 billion in the first half of 2021.

Between Jan. 1 and June 30, the average price of a barrel of Mexican crude was $97.80, with a peak of $119.62 on March 8 as global oil prices skyrocketed following the Feb. 24 start of the Russian invasion of Ukraine.

Pemex, Mexican President Andres Manuel Lopez Obrador said Monday, “was in bankruptcy and it is being reborn.”

Though oil revenue is no longer as important for Mexico’s finances as it once was, economist Victor Gomez told Efe it is “improbable the Mexican government can stop relying on the export of petroleum as a source of funds.”

Gomez, a former Finance Secretariat official who now works in the private sector, said that while oil now represents just 4 percent of Mexico’s gross domestic product (GDP), the present windfall from crude exports “is a positive note” for the public accounts.

But much of that windfall has gone to finance the suspension of retail fuel taxes that the government announced in March.

The suspension has cost the treasury nearly $21 billion in uncollected taxes, Finance Secretariat Rogelio Ramirez de la O said last week.

The price of Mexican crude is likely to remain at around $90 a barrel for the rest of 2022, according to Gomez.

Recession in the United States, Mexico’s largest trading partner, could push the price of Mexican oil down to $80 a barrel, Gonzalo Monroy, a partner in energy consultants GMEC, said.

Conversely, encouraging economic numbers out of China and “a prospect of peace between Russia and Ukraine” could boost the Mexican blend to as much as $120 a barrel, he said. EFE jsm/dr