The state-owned company could begin imports of light and
intermediate crudes as early as this year to improve production of
higher-value refined products like gasoline, Jose Manuel Carrera,
chief executive officer of its P.M.I. Comercio Internacional oil
trading arm, said in an interview.
Mexico, the world's 10th-largest crude oil producer, has very rarely
imported the commodity, instead preferring a decades-long
self-sufficiency. Still, it must import about half of its gasoline
due to flagging refinery output at home.
"Pemex is analyzing in great detail how to optimize the diet of its
national refining system with imported crudes ... both light and
intermediate," Carrera told Reuters.
P.M.I. officials say crude imports would not exceed 20 percent of a
refinery's crude-processing capacity.
The company also aims to produce less fuel oil as Mexico's power
sector increasingly substitutes cheaper natural gas for the
generation of electricity, said Carrera.
"Given the changing structure of demand in Mexico, it's important to
adjust the diet of our refineries," he added.
Carrera said the timing of any crude imports remained unclear. He
emphasized that P.M.I. was looking at light and intermediate grade
crudes from West Africa, Colombia and the Middle East, not just the
The head of Pemex's refining unit said last year that any light
crude imports to boost fuel output would only make sense in the next
few years, before major new upgrades are completed.
Sector analysts say those projects, a $11 billion push to install
deep conversion coking units at the company's three biggest
refineries, will probably be delayed through 2020.
MORE OIL TO INDIA, JAPAN
Mexico is the No. 3 crude supplier to the United States, but export
volumes to its neighbor have fallen by 43 percent since 2004 to
850,000 bpd last year, the lowest level in two decades, according to
the U.S. Energy Information Administration.
Light sweet crude output in the United States, the destination for
about 70 percent of the 1.19 million barrels per day (bpd) of crude
Pemex shipped last year, is booming because of surging volumes at
major shale plays like the Eagle Ford formation in Texas.
With the United States increasingly energy-independent, Pemex needs
Analysts expect competition to intensify for heavy crudes in the
Gulf coast refining sector in Texas and Louisiana, where most
Mexican shipments go, as more West Canadian Select heavy crude is
delivered to refiners over the next few years.
That could push out Mexican heavy crudes.
P.M.I. plans to lift crude export revenue beyond the $42.7 billion
in 2013. That was down 11 percent from 2012 as the price of Pemex's
main heavy crude export, Maya, slipped and oil output slowed 5.3
percent, according to the company's annual report.
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By the end of 2014, Mexico's export volumes to India are expected to
grow by 50,000 bpd from around 105,000 bpd now, said P.M.I. Crude
Oil Director Tomas Banos.
P.M.I. expects crude exports to Japan to double to 60,000 bpd by the
end of 2014 because of two new clients, Banos added.
A one-time sale of 1 million barrels to refiner Cosmo Oil Co
<5007.T> announced last month is the first Mexican crude bound for
Japan in 11 years. Carrera said he also expected higher sales to
European and U.S. West Coast clients, but did not say which.
"We want to sell barrels of Mexican crude to the Arabian Peninsula,"
said Banos, adding that shipments should begin this year or next.
Banos said P.M.I. expected crude shipments to China, which began in
2010, to remain steady in 2014 at about 30,000 bpd. They are
unlikely to grow beyond that due to adjustments Chinese refineries
must make to process more Mexican crudes.
In December, Mexico ended Pemex's 75-year monopoly on a wide range
of oil industry activities, including exploration and production as
well as first-hand gasoline sales.
It is unclear whether P.M.I. will remain Mexico's only legal
crude-sales agent when new exploration and production contracts
start in the next couple years, said Carrera.
This, he added, is a key detail of the fine print of the reform
Congress is debating.
"There are lawmakers who say that each operator should do as they
see fit in an open market," said Carrera. "But on the other side,
there are lawmakers and currents that have suggested that one
(national sales agent) makes sense."
If BP Plc <BP.L>, Exxon Mobil Corp <XOM.N> and other companies that
may enter post-reform Mexico had to turn over any crude production
there to a state-run sales agent, they would lose out on lucrative
President Enrique Pena Nieto pitched the new contracts allowed under
the reform, including production-sharing agreements and licenses, as
necessary tools to lure significant streams of private investment
and boost lagging oil production.
Mexican crude output averaged 2.52 million bpd in 2013, down a
quarter since hitting a peak of 3.38 million bpd a decade ago.
(Reporting by David Alire Garcia and Ana Isabel Martinez;
Dave Graham and Lisa Von Ahn)
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