Murkowski questions US-Mexico oil swap approvals

OREANDA-NEWS. October 23, 2015. Senate Energy and Natural Resources Committee chair Lisa Murkowski is questioning whether US oil companies seeking to swap crude with Mexico are having trouble winning approval from the US Commerce Department.

The Commerce Department's Bureau of Industry and Security (BIS) on 14 August began notifying a handful of US oil companies that it would act favorably on their applications to exchange US crude for similar quantities of Mexican oil.

But Murkowski, R-Alaska, in a letter sent today to Commerce secretary Penny Pritzker, noted that "despite great fanfare in the press, there are indications that no such transactions may have actually been approved."

Murkowski asked Pritzker to detail any transactions that have taken place. "If none have been finalized, please provide an explanation for the delay, along with an anticipated timeframe for the administration to take final action."

Murkowski's staff pointed to data collected by the US International Trade Commission, which showed no oil exports to Mexico in August, the latest month available.

A spokesman for BIS did not immediately respond to inquiries.

Mexico's state-owned Pemex in January asked the US to approve a request to swap 100,000 b/d of US light oil in exchange for Mexican heavy crude. Approving swaps with Mexico has been seen as a way to provide a much-sought relief valve for volumes of US light sweet crude. US refineries are configured largely to handle heavy, sour crude, and producers have been raising alarms about a glut of light crude.

Authorizing oil swaps offers a partial response to US' producers' call for repealing export restrictions first imposed in the wake of the Arab oil embargo in the 1970s. The announcement follows Commerce's decision last year to allow companies to export lightly processed condensate.

Commerce's decision did not represent a change in US law. But in allowing the oil swaps, regulators were giving emphasis to language in the Energy Policy Conservation Act of 1975, which directs Commerce when limiting crude exports to take into account "the historical trading relations" the US has "with Canada and Mexico." BIS regulations long have allowed US companies to export crude to Canada.

Pemex, for its part, has been seeking to import US light crude to blend with domestically produced oil supplying three of its six refineries. But Commerce's approval came with conditions, including a restriction that companies not re-export the Mexican crude to other countries. Companies will be able to refine the crude and export the products.

The US last exported oil to Mexico in May 2012, shipping 5,000 bl that month, EIA data show. In contrast, US imports from Mexico averaged 781,000 b/d last year.