Mexico Proposes Historic Crude Oil Swap With US

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FILE - The logo of Mexican state-owned oil company Pemex is seen at a Mexico City gas station.

       

             

Reuters

 

January 08, 2015 6:15 PM

               

MEXICO CITY—

 

Mexico's state oil company, Pemex, said Thursday that it had proposed an oil swap with the United States, potentially ushering in the first sustained crude imports by Mexico from its northern neighbor after years of self-sufficiency.

Pemex said it had set out a plan to import up to 100,000 barrels a day of light crude and condensates to mix with its own heavier crude at domestic refineries. In exchange, Mexico would provide the United States with heavier Mexican crude for processing at U.S. refineries, and would use the imports from the United States to boost local gasoline and diesel output.

An official at Pemex said the oil swap could go ahead as soon as the first quarter of this year.

While Mexican officials signaled their readiness to import crude several times last year, Thursday's news was the first official confirmation that they were seeking a formal swap that would open the door to sales despite a 40-year-old U.S. ban on exports.

If approved, the imports could be a watershed in energy relations with the United States, where output has surged because of a shale boom.

Until now, Mexico, the world's 10th-biggest producer of crude, has focused on exporting much of that oil, though it already imports much of its gasoline.

The proposal, which is still being negotiated with the U.S. government, does not signal an increase in Mexican oil shipments to the United States, Pemex said.

"This does not represent an additional commitment to the 803,000 barrels of Mexican crude that were exported on average daily to the United States last year,'' Pemex said.

Following the Mexican government's 2013 energy reforms, which ended Pemex's 75-year monopoly on production and exploration of oil and gas, the state-run company will soon face the arrival of powerful foreign competitors.

Pemex, whose output slipped last year to the lowest on record, said the oil swap would help improve processing at its Salamanca, Tula and Salina Cruz refineries, and would also enable the company to cut transport costs.

In the late 1990s, Mexico and the United States conducted an exchange of crude from the U.S. Strategic Petroleum Reserve.

Mexico is the third-biggest crude supplier to the United States, behind Canada and Saudi Arabia, but it has maintained a decades-old devotion to crude oil self-sufficiency at home.

U.S. Commerce Secretary Penny Pritzker said this week that the United States was in talks with Mexico over whether to export light crude oil to its neighbor.