US approves limited crude-oil trade to Mexico

The Commerce Department, which is responsible for such exports, is “acting favorably on a number of applications” to export oil to Mexico in exchange for importing oil to the United States from Mexico, Reuters reported.

But environmental groups have opposed lifting the ban out of concern it would spur further drilling for crude oil in the U.S. Pemex’s proposal has also drawn criticism in Mexico, where residents are sensitive about the country’s falling oil production despite warnings from officials that Mexico could become a net importer if it doesn’t explore new oil reserves.

The transaction would technically be a swap for Mexican oil that’s been shipped to the U.S. Gulf Coast for decades.

The U.S. will permit some crude oil sales to Mexico in a step toward loosening the government’s ban on most domestic oil exports in place since the 1970s oil embargo, an administration official said.

As domestic oil production has surged past 9 million barrels a day amid a domestic energy revolution from shale formations, companies have feared a price crash here amid abundant supplies and sought ways to sell the oil in higher- priced foreign markets.

Reuters, citing administration officials, said the Pemex licenses will be issued at the end of the month and are good only for a year.

“If you look at the regulations that the Commerce Department has set, they set a pretty low bar for swaps with Mexico, it’s just that nobody had asked before”, Jason Bordoff, founding director of Columbia University’s Center on Global Energy Policy, Bordoff, a former energy adviser to President Obama, said in a phone interview. Lisa Murkowski (R-Alaska), approved a bill recently to lift the export ban completely.

The move to trade crude with Mexico comes as the Obama administration weighs a long-delayed decision about whether to approve the Keystone XL pipeline. Mexican refineries are better suited for processing light crude oil. This amounts to about 1 percent of current U.S. production.