Mexico to start light crude imports this month

Mexico's state-run Pemex plans to start importing Light Louisiana Sweet (LLS) crude from the US this month for the first time, the company told Argus.

Energy officials outlined a test program of 100,000 b/d earlier this year. Official details on volume will be disclosed in the coming weeks, the company said.

The plan is not new, as the company has been discussing importing light crude from the US for three years, since 2015. Even before most US crude export restrictions were removed in 2015, Mexico had already requested permission to import light crude.

These first imports would be used in a trial at the 330,000 b/d Salina Cruz refinery on the Pacific coast, although a tender will specify delivery to the Pajaritos terminal in the Gulf coast. If the crude suits the refinery, imports would continue until time for the administration of president-elect Andres Manuel Lopez Obrador, who takes office 1 December, to approve such imports, Pemex said.

Mexico has never imported crude in large volumes for continuous periods, but the country's refining system — configured to process light crude — is in a steady decline as light crude production has been dropping.

In the first eight months of the year, Mexico's light crude production dropped by 17pc to an average of 590,000 b/d from 712,000 b/d in the same period of last year. In August, Pemex's Xanab field, the biggest producer of light crude in Mexico, dropped to zero as seawater invaded the well, the company said.

A lack of investment in refinery maintenance, plus the drop in light crude output and an increasing international crude price — which makes exports more profitable — have caused Pemex's six refineries to operate below 50pc capacity on average all year.

Salina Cruz, the destination for the light crude imports, processed 150,000 b/d of crude during August, 13pc less than in July, and well below its five-year average of 237,000 b/d.