Exclusive: U.S. opens taps, a bit, on re-exporting oil to Europe
By Selam Gebrekidan
NEW YORK (Reuters) - The U.S. government has authorized limited re-exports of foreign crude to Europe, for the first time in years, raising new questions about how companies are testing the limits of controversial, decades-old export constraints.
The Department of Commerce has granted two licenses to export crude to the UK since last year and another two to Italy, according to data Reuters obtained through a Freedom of Information Act request.
One application for German exports was filed in January and is awaiting a decision by the Bureau of Industry and Security (BIS), which is responsible for reviewing requests to export crude under a 1975 law that bans most shipments with a few exceptions, including sales to Canada and re-exports.
On Tuesday, after Reuters reported on the existence of the permits, a BIS official said they only covered re-export of foreign oil and not domestically produced crude oil. He did not say where the oil would come from.
The bureau earlier had not responded to repeated requests for comment on whether the licenses were for the re-export of foreign crude or swap deals for oil that had been produced in the United States; both provisions are allowed within current export regulations.
These are the first permits for shipments to the UK since at least 2000 and the first to any European country since 2008, according to data from the BIS. The bureau has approved 120 licenses since January 2013, nearly 90 percent of which were for sales to Canada, the data show.
While the permits do not show that U.S. producers are moving more of their oil overseas, the licenses could add to the growing debate in Washington on the benefits and pitfalls of lifting the ban, among the year's most urgent policy questions as the relentless rise in shale oil production threatens to saturate domestic refiners as soon as this year.
They may add to expectations that the Obama administration will allow companies to use provisions in the existing regulation to slowly increase exports, while stalling on a decision on whether to scrap the ban. Continued...