MEXICO CITY – A historic crude oil swap between the United States and Mexico is “great news” for both countries, and Mexican national oil company Pemex expects the permit by the end of this month, the head of its commercial arm said on Friday.
Reuters reported earlier on Friday that the Obama administration will allow sales of U.S. crude to Mexico for the first time, marking another milestone in loosening a contentious ban on exporting domestic oil.
Jose Manuel Carrera, chief executive of Pemex’s commercial arm, PMI Comercio Internacional, said the crude swap could bring up to 100,000 barrels per day of light U.S. crude to Mexico’s refineries, boosting gasoline output, in exchange for Mexican heavy crude.
He said the first U.S. crude imports will likely ramp up from a much lower level and that Mexico could begin receiving the crude shipments later this year.
“This is great news,” Carrera said. “It will allow refining in both countries to be more efficient.”
The shipments from the United States of light crude will help Pemex’s aging refineries, configured to run a lighter crude mix than the country’s increasingly heavy crude production, and boost the output of higher-value refined products like gasoline and diesel. 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.
Carrera emphasized that integrating U.S. light crude into Mexico’s refining sector would be gradual.
“These processes will begin bit by bit because when you add new crude to your refineries it has to start on a small scale,” he said.
Pemex should know by the first quarter of next year which light U.S. crudes will work best, following test runs, he said.
The imports could come from either onshore or offshore production in the United States, he added, including shale or conventional oil.
He added that Pemex has already asked for several price quotes from U.S. crude producers, though he declined to name them.
The first Pemex refineries to process the imports will be the company’s Tula and Salamanca plants.
Pemex’s Salina Cruz refinery, the country’s largest, will also receive some U.S. imports eventually, the company said in a statement on Friday.
All three lack so-called deep conversion coking units, which allow refineries to boost gasoline yields from heavier crude slates and reduce output of lower-value fuel oil.
(Reporting by David Alire Garcia; editing by Simon Gardner, Bill Rigby and Leslie Adler)
This article was from Reuters and was legally licensed through the NewsCred publisher network.