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Pemex Pursuing Tax Reimbursement After Overstating Output

Aug. 28 (Bloomberg) -- Petroleos Mexicanos is preparing a request for the reimbursement of taxes the state-owned oil company paid on barrels it never produced.

Pemex, whose taxes provide Mexico’s government with about a third of its budget, may seek the refund after over-reporting crude output for the first seven months of the year, according to investor relations head Rolando Galindo. Negotiations with the Finance Ministry could be lengthy and might not result in a reimbursement, he said in a telephone interview yesterday.

The Mexico City-based producer last week reduced its year-to-date production through July to 2.34 million barrels a day from a previously reported 2.47 million, attributing the difference to water levels and measurement inaccuracies. Earlier yesterday, a person with direct knowledge of the matter said Pemex plans to ask for the reimbursement and is in the process of calculating how much it overpaid. The person asked not to be named because the plan hadn’t been made public.

The company, which is looking to arrest a decade-long production slide by partnering with foreign producers, pays some duties based on volumes recorded at the wellhead. That means the measurement distortions increased its fiscal burden. The difference between previously reported output and the revised numbers is about 126,000 barrels a day, or a total this year of 26.7 million barrels -- a value of $2.5 billion.

“Pemex, like any other taxpayer, will have to request a refund on its duties paid with the Tax Administration Service,” the Finance Ministry said in an e-mailed response.

Bond Rally

The company has paid 598 billion pesos ($45.7 billion) in taxes and duties so far this year. Its press department didn’t immediately provide a response on how much of that was tied to reported production.

As its 76-year oil production monopoly ends, Pemex has held discussions with “dozens, if not hundreds of companies” interested in potential investments in Mexico’s energy, Chief Executive Officer Emilio Lozoya said in an Aug. 14 interview.

“Right now is a sensitive time when Pemex is shopping around for potential joint venture partners,” Tim Samples, a law professor and Mexican energy analyst at the University of Georgia, said in a telephone interview. “If you’re thinking about forming a joint venture with Pemex for a certain project, you’re already taking into account a lot of risks and complexities, and this just adds to that.”

Pemex’s $2.1 billion of bonds due 2023 rose for the 13th time in 14 days, pushing down the yield to a record low 3.69 percent, according to data compiled by Bloomberg.

The world’s ninth biggest crude producer discloses production and distribution volumes to the U.S. Securities and Exchange Commission and Mexico’s National Banking and Securities Commission.

To contact the reporters on this story: Adam Williams in Mexico City at awilliams111@bloomberg.net; Carlos Manuel Rodriguez in Mexico City at carlosmr@bloomberg.net

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net Robin Saponar, Jonathan Roeder

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