EconomyFinancialPemex refineries report unexpected profits thanks to high oil...

Pemex refineries report unexpected profits thanks to high oil prices and government stimulus

The Pemex subsidiary that covers the refining business reported profits last quarter, after continuous years of losses due to the low efficiency of refineries owned by the state company.

The latest financial statement of the company reveals that during the last quarter, Pemex Industrial Transformation – which also contains the business of importing and selling fuels – saw a net profit of 16,612 million pesos . The subsidiary usually reports negative results and has been placed as one of The last time the subsidiary reported profits was in the third quarter of 2018, when, under the strategy of the previous federal administration, the amount of crude processed in the refineries was reduced to avoid the losses generated by the poor condition of the complexes.

But now the reported utility has been the result of something different: and the state-owned Pemex has not been the exception. Over the past half year, fuel-producing companies have broken record profit margins, with some U.S. Gulf Coast refiners seeing margins as high as $60 a barrel, after reporting profits below $10 for the last few months. years, even before the pandemic.

For Pemex, margins have not taken such an abrupt jump, but during the last two quarters it has reported margins much higher than usual. In the first quarter it averaged a variable refining margin of 18.31 dollars per barrel and during the last quarter of 14.51 dollars. However, these figures are above the usual earnings reported by Pemex per refined barrel. In the last quarter of last year, it reported a margin of 31 cents per barrel. The refining margin can be defined as the difference between the price of a barrel of crude oil and the price of oil already processed.

Despite the increase in profits reported by refiners, the company ended the upward streak it reported since the third quarter of 2020 in terms of fuel production. From April to June, it produced 805,000 barrels per day of gasoline and other petroleum products, a reduction of 4% compared to the previous quarter.

The state company has also benefited from the fiscal stimulus for fuel importers , launched last March. During the second quarter, Pemex received 64.5 billion pesos from the Treasury for this concept, according to what was said in its conference call with analysts. Thus, the company recovered the difference between the international price of gasoline and the price at which it sells the products in the domestic market, which is at a lower amount due to the government policy of not abruptly increasing the price of gasoline.

But international fuel prices have begun to decline, and so have refining margins. Analysts project that the profits reported during the last quarter will not be repeated during the following months. But, despite this, this subsidiary of the oil company could close with much lower losses than those reported in past years.

“[The latest results] are good news for Pemex, but this is not durable, as margins deflate, Pemex TRI will record losses again,” says an analyst who has asked not to be quoted. “This year Pemex could close with a much smaller refining loss, I don’t think it will be enough to have a positive year, but maybe it will have fairly low losses.”

So far this year, and despite the reported profits, Pemex Industrial Transformation accumulates losses of just over 2,000 million pesos. During the same period last year, this negative figure already exceeded 70,000 million pesos.

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