U.S. approves landmark crude oil export swaps with Mexico

Oil pump jacks are seen next to a strawberry field in Oxnard, California. (Lucy Nicholson / Reuters)
Oil pump jacks are seen next to a strawberry field in Oxnard, California. (Lucy Nicholson / Reuters)

By Timothy Gardner / Reuters

The Obama administration will allow limited sales of U.S. crude to Mexico for the first time, a senior administration official told Reuters, marking another milestone in loosening a contentious ban on exporting domestic oil.

The Commerce Department is “acting favorably on a number of applications” to export U.S. crude in exchange for imported Mexican oil, the official said. Such oil swaps are one of several possible exemptions allowed in the four-decade-old law that otherwise bans most overseas shipments.

The approvals come eight months after Mexico formally sought permission for a swap, a historic step for a nation where oil self-sufficiency has long been a source of pride.

The shipments, likely to be lighter, high-quality shale oil, will help Mexico’s aging refineries produce more premium fuels. U.S. refiners will continue to get Mexican heavy oil, a better match for them than the deluge of light oil coming from Texas and North Dakota.

The licenses, good for one year, will be formally issued by the end of August, the official said. He declined to offer further details on volumes, saying only that the number of approvals was “a handful.”

http://www.reuters.com/article/2015/08/14/us-usa-oil-exports-exclusive-idUSKCN0QJ1RI20150814

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