Mexico would stop cutting oil exports due to price rise

Mexico would keep its crude exports at around 1 million barrels a day to take advantage of the recent spike in prices, temporarily delaying President Andrés Manuel López Obrador’s plan to cut them in half as part of his energy self-sufficiency goal, a person said. with direct knowledge of the situation.

The government is reviewing how to use surpluses from a spike in international crude prices to subsidize rising gasoline costs in the country, which is likely to delay its commitment to slash exports, according to the person.

In December, Lopez Obrador said that the state oil company Pemex will significantly reduce its shipments abroad by more than half to 435,000 barrels per day this year so that the company can refine enough crude in Mexico so that it can eventually phase out fuel imports. Crude exports from Petróleos Mexicanos, as the company is formally known, have already dropped to 832,000 barrels per day in January from an average of 1.02 million during 2021.

However, the president earlier this month hinted at some downsides to his strategy, which would have ended all oil exports for next year, saying higher crude prices resulting from Russia’s invasion of Ukraine would be used to offset the cost of growing fuel imports for Mexicans.

For his part, the Secretary of Energy, Rocio NahleHe said last week in an interview with Bloomberg Line that the Government was reconsidering its plan to reduce oil exports after the recent increase in oil prices.

The additional government oil revenues would be enough to subsidize the higher cost of gasoline prices at the pumps. Pemexdepending on the person. The price of crude from Mexico, known as Maya, rose nearly 68% from early December to $99.06 a barrel on Friday.

Neither Pemex nor the presidential office immediately responded to requests for comment.

Last year, Mexico’s Treasury Department spent 104 billion pesos (about $5 billion) on gasoline and diesel subsidies, an amount that would more than triple this year if the subsidies are extended for the rest of the year. 2022, according to a report by the risk-based consultancy EMPRA, located in Mexico City. At an average of US$90 a barrel for the Mexican export mix this year, public finances could reach a surplus of 170,000 million pesos, according to the firm.

“However, if the López Obrador Administration continues to decrease its exports while heavily subsidizing gasoline prices, this surplus will quickly disappear”analysts wrote EMPRA in a report on Tuesday.

López Obrador’s original plan to halt all crude exports was met with skepticism at the time, given Pemex’s poor operational and safety record. The company’s refineries have been operating at a fraction of capacity for half a decade after years of underinvestment and lack of maintenance.