Commerce Department denied several US crude oil exchange
applications: official
Washington (Platts)--29 Oct 2015 526 pm EDT/2126 GMT
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
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