Trumps Signs Permits To Boost Oil Export Infrastructure To Mexico

President Donald Trump yesterday signed two permits for oil export infrastructure along the U.S.-Mexico border in Texas to boost exports of crude to Mexico.

One of the permits is for NuStar Energy, which will operate pipelines under the Rio Grande that transport crude oil and refined products from Texas to Mexico. The other permit is for Kansas City Southern Railway Co., which will build and operate a railway bridge in the border town of Laredo.

Mexico is the biggest importer of U.S. crude oil, according to the Department of Energy. Last year, the U.S. shipped 1.2 million bpd of oil and products to Mexico, accounting for 14 percent of total exports, making the country the biggest recipient of U.S. crude oil, with Canada coming in second, taking in 1 million bpd in 2019.

At the same time, the U.S. is a major recipient of Mexican crude. In fact, the trade in oil between the two mostly involves the U.S. importing crude and exporting back refined products. This was part of the reason why President Andres Manuel Lopez Obrador last year pledged a huge new refinery, with a capacity of 400,000 bpd of gasoline.

"In a three-year period, at the latest, we need to try to consume our own fuels and not depend on foreign gasoline," Mexico's energy minister, Rocio Nahle said at the time. 

Mexico is also a major buyer of U.S. natural gas and it is set to buy ever more of the commodity as production begins to rebound in Texas. During the second half of this year and in 2021, the average natural gas exports of U.S gas to Mexico could hit 1.5 billion cu ft daily, according to Rystad Energy, the boost will be helped by the completion of the Villa de Reyes-Aguascaliente-Guadalajara (VAG) pipeline, which began operating in June.

By Charles Kennedy for Oilprice.com

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