| | |  Business News | July 2008 
Falling Mexican Crude Exports Having Minor Effect
 Janet McGurty & Jason Lange - Reuters
go to original
| | A Chevron tanker truck unloads gasoline into underground storage tanks in Burbank, June 18, 2008. (Reuters/Fred Prouser) | | |
New York/Mexico City - Falling exports of Mexico's heavy sour crude oil is seen having little or no effect on operations at the U.S. oil refineries with long-term contracts to buy it.
Valero Energy Corp (VLO.N), one of the nation's largest refiners, said Tuesday it had no problem supplying crude oil to its refineries, despite declining crude exports from Mexico, a top U.S. supplier.
Mexico's exports to the United States fell by 46,000 barrels per day in May to 1.068 million bpd, from 1.114 million bpd in April, according to the latest data from Mexico's Energy Ministry.
Valero's 325,000-barrel-per-day refinery in Port Arthur, Texas, has a contract to buy 206,000 bpd of the heavy sour Maya crude from Mexico through 2011.
"Valero has the flexibility to get heavy sour crudes from all over, at prices competitive with Maya," said Bill Day, a spokesman for the company.
Mexican output has been falling since 2004, dragged down by a faster-than-expected decline of its massive but aging Cantarell offshore field.
Crude output at the Cantarell oil field has dropped to its lowest level in more than 12 years, after declining for eight straight months through May.
Mexico, the world's No. 6 crude supplier, produced 2.798 million bpd in May, below the company's 3.0 million bpd target, though the government says crude output should rise to around 2.9 million bpd by the end of the year.
State-owned oil company Petroleos Mexicanos, or Pemex, confirmed that Valero had other sources of supply for its refineries.
"Valero receives additional Mexican crude under other contracts that satisfy its needs for this type of crude for its entire refining system," Pemex said in an email to Reuters.
Valero also buys heavy sour crude from other countries besides Mexico.
Trade sources said Valero has been receiving less than the contracted amount of Maya for a while, supplanting it with better-priced heavy sour crudes like Mars, Poseidon and Saudi Heavy, as well as feedstocks.
Prices for sours in U.S. cash crude markets gained this week, at the expense of the lighter, sweeter grades, traders said, as Poseidon and Mars moved up to the higher end of recent trading ranges as Mexican exports slowed.
"That's one reason (U.S.) sours are stronger, at least until other supplies get here from Saudis and others," said one U.S. oil trader.
Shell, the U.S. arm of Anglo-Dutch oil giant Royal Dutch Shell, said it was still receiving at least the minimum amount of heavy sour crude from Pemex, its joint venture partner, to process in its 333,700 bpd refinery in Deer Park, Texas.
"Shell Deer Park continues to receive Maya crude oil at or above contract minimum rates with Pemex," the company said, adding that it also receives crude oil from other sources.
Pemex said its long-term contract to supply Deer Park with crude is for 170,000 bpd, but, historically, it has sent more than than 220,000 bpd.
The blase attitude of the market to falling crude exports in a time of record high crude prices has some industry watchers thinking that the high crude feedstock cost, falling consumer demand and weak refinery profit margins are setting up refineries for economic run cuts.
According to Credit Suisse, refinery profit margins for the last week fell by 15 percent to 25 percent as crude prices hit a record above $140 a barrel for more expensive, lighter sweeter crude.
"What if it's Shell and Valero not taking, cutting runs, instead of Pemex not sending. Although the latter seems just as likely," said one international oil analyst.
(Additional reporting by Bruce Nichols in Houston; Editing by Walter Bagley) |
|
| |
Vallarta Weddings
Tell a Friend
Site Map
Print this Page
Email Us