The dam holding back U.S. crude exports is cracking.
For the first time in 40 years, the U.S. gave broad approval to export its crude to a country other than Canada, issuing a license to Mexico’s state-owned oil company, Petroleos Mexicanos, to import as much as 75,000 barrels a day for the next year.
Pemex’s PMI unit will import light crude for one year starting in October in exchange for heavy Mexican oil, the company said in an e-mailed statement. The lighter grades will help the nation’s refineries produce more cleaner fuels, the company said.
“The announcement about the crude-oil swap license with the United States is definitely very positive for our crude-oil processing operations and will generate additional value for the company,” Pemex Treasurer Rodolfo Campos said on the company’s third-quarter earnings call.
Energy producers including Exxon Mobil Corp. and ConocoPhillips have called for an end to rules restricting U.S. crude exports that were instituted after the Arab oil embargo in the 1970s. The U.S. House of Representatives passed a bill repealing the restrictions earlier this month, while lacking the votes to override a threatened presidential veto by the Obama administration.
Drilling in shale regions from Texas to North Dakota reversed a decades-long decline in U.S. oil production. The output has boosted commercial inventories to the highest level since 1930. Much of the new output sells at a discount to global prices for a number of reasons, including that it’s mostly trapped within the U.S. by the export restrictions.
The U.S. has a few exceptions to its crude export rules. Shipments to Canada are allowed, Alaskan oil can be exported, and the Commerce Department last year ruled that exports of lightly processed condensate, an ultra-light form of oil found in some shale rock, can be sent abroad.
Commerce officials approved a swap with Mexico earlier this year that allows as much as 100,000 barrels of light U.S. crude a day to be exported. A spokesman for Pemex said the company decided to take only 75,000 because that’s all that was required for its refineries.
Pemex has said the U.S. crude will help boost gasoline production at its refineries in Salamanca, Tula and Salina Cruz. Pemex exported 803,000 barrels a day of mostly heavy oil to the U.S. last year and Mexico imports about half its gasoline. Crude output from Pemex has been falling for a decade.
Pemex lost money for the 12th straight quarter, the company said today. It lost 167.6 billion pesos ($10.1 billion) in the third quarter, compared with a 60 billion-peso shortfall a year earlier as oil prices and output fell.
Mexico’s government approved energy reforms last year that allowed its refiners to import oil, after decades of relying on its own production.
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