July 28 (Bloomberg) -- Petroleos Mexicanos, the state-owned oil company, said second-quarter profit fell 56 percent as the company paid higher taxes on record oil prices.

Profit was 16.7 billion pesos ($1.7 billion), down from 38.3 billion pesos a year earlier, Mexico City-based Pemex, as the company is known, said on its Web site.

Pemex's tax bill jumped 61 percent to 231.7 billion pesos. The taxes eroded profit from the record price of the Mexican mix of crude sold on the international market. The average price of Mexican crude jumped 83 percent to $104.10 a barrel, boosting net sales 29 percent to 371.6 billion pesos.

Pemex taxes account for about 40 percent of Mexico's budget. Labor and other costs also cut into earnings, the company said.

The company has also lost out on $20 billion of potential sales this year because of the sharpest decline in output at its largest field, Cantarell, in a dozen years.

To contact the reporter on this story: Andres R. Martinez in Mexico City at amartinez28@bloomberg.net

Last Updated: July 28, 2008 21:10 EDT