After three years of talking, Mexico may finally buy US Crude

The Petroleos Mexicanos (Pemex) Miguel Hidalgo Refinery in Tula, Hidalgo, Mexico. (Bloomberg pic)

HOUSTON: Mexico may finally buy US crude oil for the first time ever.

After three years of announcements, negotiations, and potential deals, Petroleos Mexicanos is seeking to buy a trial cargo of 350,000 barrels for its refineries in October.

The much-anticipated deal has been in the making since 2015, when US exports were still banned and Mexico applied for a special license to buy American barrels. At the time, the company even reached out to oil traders to test the waters, but ended up abandoning the idea. Time passed and in the meantime the US lifted its 40-year ban on oil exports and now the US exports almost twice as many barrels as Mexico does.

Pemex invited oil traders to supply Light Louisiana Sweet for delivery at the Atlantic oil terminal of Pajaritos at the end of October. The terminal is connected to a pipeline that distributes domestic light oil to four refineries, including Salina Cruz, the country’s largest, according to data compiled by Bloomberg.

The company’s chief executive Carlos Trevino earlier this week disclosed plans to import 100,000 barrels of oil a day of light crude in October for the Salina Cruz refinery to make up for declining production at the Xanab oil field, which didn’t pump a single barrel of oil in July and August.

Pemex is importing Light Louisiana Sweet on a trial basis and depending on how well the oil does at its refineries, it may seek cargoes in November, according to a person familiar with the situation.

Mexico’s oil production fell to 1.82 million barrels a day in August, down 25% since the country approved an energy reform to end a government monopoly on energy and bring in investment from international companies.