Mexico's Pemex expects wider loss in 2008

By Robert Campbell

MEXICO CITY, Jan 27 (Reuters) - Mexico's state oil company Pemex said on Tuesday it expected its net loss in 2008 to be "significantly greater" than its 2007 results due to the sharp drop in oil prices in the fourth quarter.

Pemex did not provide an estimate of its expected loss in a statement filed with the U.S. Securities and Exchange Commission, but it comes as the company has been struggling with sliding oil production due to falling yields from the giant Cantarell field.

Pemex lost 16.1 billion pesos ($1.48 billon) in 2007. The company earned 5.6 billion pesos ($411 million) over the first nine months of 2008.

The company frequently posts annual net losses due to a heavy tax burden, inefficient operations and a crushing liability for retiree benefits.

Oil output fell 9.2 percent in 2008 to 2.799 million barrels per day, compared to 2007. Oil exports slumped by 16.8 percent to 1.403 million bpd over the same period.

Recent changes to tax legislation cut the ordinary hydrocarbon duty to 74 percent from 79 percent and the rate will decline annually until it reaches 71.5 percent in 2012.

Legislation enacted in October also boosted tax deductions for expenses at more costly oil fields.

A decline in the value of the Mexican peso, which lost more than 20 percent of its value against the dollar in the fourth quarter, would also generate foreign exchange losses on its dollar-denominated debt, Pemex said in the filing.