Several US companies have sought permission from the Obama administration to export crude oil to European, Asian, African and Latin American countries, but have been rejected because they have failed to qualify for strict exemptions to long-standing crude export restrictions, a key administration official said Thursday.
These companies, many of whom sought exchanges with countries similar to a 75,000 b/d exchange announced by Mexico’s Pemex this week, were not allowed to export US crude to several other countries because they could not prove the oil could not be marketed in the US, the US Commerce Department’s Matthew Borman said during an Argus conference in Houston.
US law “favors” crude exchanges, or swaps, with Canada and Mexico, but only allows swaps to other countries if certain conditions are met, said Borman, the deputy assistant secretary of commerce for export administration with Commerce’s Bureau of Industry and Security. One of these conditions is that potential US crude exporters need to prove that the crude they want to export cannot be “reasonably marketed” in the US.
“You really have to show that the crude oil you want to be exported can’t be refined in the United States,” Borman said. “So it’s a really high standard.”
Borman declined to comment on how that standard could be met, but said it would have to be “something really dramatic.”
“So far we have not seen any application which has made that bar,” he said.
The increase in export applications comes amid a push by US producers and many Republican lawmakers to repeal restrictions on US crude exports, which have been in place for roughly 40 years.
While the House of Representatives earlier this month approved a bill to repeal all crude export restrictions, it is unclear if the Senate will take up the bill, and the Obama administration has threatened to veto it. The White House has given no indication it plans to weaken crude export restrictions and many analysts expect the export issue may have to wait until Obama leaves office in 2017.
The approval process by BIS is entirely confidential and Borman declined to offer details on applications to export to countries other than Canada and Mexico.
He also declined to comment in detail on the recent approval for a swap with Pemex and would not say whether there were other companies involved in that approval. Pemex announced Wednesday that the US government had granted a license to Pemex to import 75,000 b/d of light US crude in exchange for an equal amount of heavy Mexican crude.
Borman said that in fiscal 2015 BIS approved 181 licenses for exports of crude oil valued at $357.3 billion, almost all to Canada. That is a decrease from fiscal 2014, when 189 applications were approved, Borman said.
–Brian Scheid, brian.scheid@platts.com
–Edited by Derek Sands, derek.sands@platts.com
“You really have to show that the crude oil you want to be exported can’t be refined in the United States,”
There should be no reason whatsoever denying that ALL crude oil be refined here.