Exclusive: Enbridge plans to re-export Canadian oil via United States

Fri Apr 4, 2014 5:00pm EDT
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By Selam Gebrekidan and Nia Williams

NEW YORK (Reuters) - Enbridge Inc (ENB.TO: Quote) has obtained a license to re-export Canadian oil from the United States, becoming the first company to publicly confirm a move that could fuel debate over U.S. trade policy and oil sands pipelines.

U.S. subsidiary Tidal Energy Marketing has a license to export "limited quantities" of Canadian-origin oil from a U.S. port, Enbridge said, confirming weeks of market rumors and speculation about such shipments. Market sources say they expect the first cargoes to sail for Europe later in April.

Terri Larson, an Enbridge spokeswoman, told Reuters in an email that the firm planned to export "less than 1.5 percent of Enbridge's total U.S. shipments." She declined to provide specifics on the port of departure, the destination or the type and volume of oil involved, saying this is commercially sensitive information.

The United States does not allow exports of its own oil, even though its domestic output is at a 26-year high. There are few exceptions to the rule; shipments can go to Canada, for example, and foreign oil can leave U.S. shores so long as exporters have a license.

Reuters reported earlier this year that the U.S. government granted a number of permits to re-export foreign crude.

But Enbridge is the first company to publicly confirm it holds a re-export permit and intends to use it. The company has to segregate the re-exports from any U.S. oil it carries in its pipelines.

The re-exports are bound to draw more attention to these restrictions as oil companies mount pressure on the Obama administration to end the ban, in place since the Arab oil embargo of the 1970s.

They may also anger environmental groups that oppose growing oil sands production in Canada, and the Keystone XL pipeline, which they say will help tar sands oil reach a global market.   Continued...

Enbridge President and CEO Al Monaco speaks during the IHS CERAWeek energy conference in Houston March 6, 2013. REUTERS/Richard Carson