OREANDA-NEWS. July 08, 2015. Platts’ Richard Capuchino has spent the past few months speaking with upward of 40 entities as part of Platts’ Structured Market Engagement Program. He entered into many discussions about the Americas crude market, and here he shares what he learned about how Latin American markets could respond to possibly expanded US crude exports.

Everyone from college students in Houston to government officials in Latin America has asked, “When will the United States begin to export crude?” The question of US crude exports is one no one can answer yet, but it’s a massive talking point in Latin America.

Based on various conversations, here are some possible results that could come out of widespread US crude export activity:

    • Mexico could cut out the middleman for Eagle Ford: Mexico would be interested in Eagle Ford to maximize its gasoline yields at its refineries. At last word, Mexico is looking to do a swap for 100,000 b/d of Eagle Ford crude and condensate for 100,000 b/d of Mexican heavy crude. As there are no crude pipelines that connect the two countries, ship loading activity out of Corpus Christi would increase. As of May, the port of Corpus Christi loaded 604,042 b/d of crude in May, up from 523,074 b/d in May 2014, and 45,803 b/d of condensate in the same month, down from 58,829 b/d in May 2014. The port of Corpus Christi’s proximity to the Eagle Ford currently allows a direct route for moving crude and condensate to domestic destinations on the US Gulf and East coasts, as well as Canada. And with the opening of the Mexican energy sector, if Mexico successfully produces light crude from its section of the Eagle Ford Shale, the question is whether the US’ neighbor to the south would beat it to the punch and export Eagle Ford crude first. Mexico currently exports Maya, Olmeca and Isthmus crude from three ports in its Gulf of Mexico and Isthmus crude from the Pacific port of Salina Cruz.
    • Brazil could reassess its use of US Eagle Ford crude: Brazil is a large importer of Akpo, 45.98 API and 0.06% sulfur, and Agbami, 47.88 API and 0.04% sulfur, from Nigeria. Petrobras replaced imports of those crudes at its 100,000 b/d Pasadena, Texas refinery with Eagle Ford, assessed  by Platts at 47 API. Could they do the same at their Brazilian refineries? “It’s possible, but I’m not sure if it makes economic sense,” said one South American market source. However, the source sees politics as the main hurdle to US crude exports.
    • Uruguay could be a destination for US Eagle Ford: Uruguay, a large buyer of Nigeria’s Bonny Light, 35.09 API and 0.15% sulfur, was one of first South American refiners to purchase West African grades after they became more available after the increased Eagle Ford production in the US. Would there be a possibility for imports of Eagle Ford crude into Montevideo? “To be imported by ANCAP, the crude would have to be between 28-40 API, less than 1% sulfur, a pour point lower than 5 degrees Celsius and a TAN below .05,” said a South American refining source. “The second hurdle would be the price and the cuts that the crude yields,” said the source.