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| US to exchange crude with Mexico as exports climb to 1 million b/d: Citi |
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| News Source：http://www.jinchemical.com/
; SendDate：2014-11-12 11:31:46 |
The US is expected to export more than 1 million barrels a day of crude oil and condensates by early next year, including roughly 200,000 b/d in light-for-heavy crude exchanges with Mexico, analysts with Citi said in a new report.
According to Citi's estimates, US crude oil exports to Eastern Canada will grow 500,000 b/d, exports from Alaska will climb to 100,000 b/d, exports of processed condensate will hit 200,000 b/d and exports to Mexico will grow to 200,000 b/d from zero.
Those Mexican exports will likely be done, at least initially, under exchanges in which the US Commerce Department allows a barrel-for-barrel trade of light crude exports for heavy crude imports, analysts said.
"In the case of Mexico, there is a good fit between the heavy crude exported from Mexico to the US versus the light crude that could be sent back to Mexico in exchange," the analysts wrote. "Mexican refineries would benefit from running the light sweet crude to improve light product yields, and US Gulf Coast refiners could continue to run its preferred crude slate of heavier, sourer oil."
Citi Global Head of Commodity Research Ed Morse said he expects the first such exchange to take place this month.
Alaska Republican Senator Lisa Murkowski's staff detailed these crude exchanges with Mexico in a staff memo earlier this year as a potential path around US crude export restrictions.
"Exchanges cannot solve the mismatch between refineries geared to process heavy crudes and record production of lighter grades of petroleum, but they would be a partial measure that could help alleviate some of the glut," the memo states. "The Bureau of Industry and Security already has determined that these much simpler transactions -- crude-for-crude, barrel-for-barrel exchanges with 'adjacent foreign states' -- are in the national interest."
US law currently allows crude exports to Canada and a pair of commodity classification rulings from Commerce earlier this year are expected to open the door to processed condensate exports. Additionally, Citi analysts expect that ConocoPhillips' recent shipment of 800,000 barrels of ANS crude from Alaska is the start of a crude export boom for the state. The cargo was the first ANS export since 2004, but is not a shift in US policy.
In addition, analysts said they expect the US will soon allow exports to Mexico, as they currently do to Canada before permitting them to other free-trade-agreement partners, particularly South Korea, Singapore, Chile and Israel, largely due to market fundamentals.
"As exports of crude oil to Canada soon reach a market size limitation, pressures will grow to develop exports elsewhere, starting with Mexico," Citi analysts wrote.
These analysts said exports to Canada may be limited to 500,000 b/d and said Mexico's export cap may be 300,000 b/d. Still, this estimate could be low because Mexico has never imported much US crude and little is known about how Mexican refinery performances can be improved by importing light sweet crude from Texas and exporting heavier crudes to the US, Europe and into Pacific markets, analysts said. |
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