West Coast Refiners to Gain as Mexico Reopens Pacific Oil PortBy
First shipmment of Mexican crude from Salina Cruz in progress
Pemex declared force majeure in June after refinery outage
U.S. West Coast refiners will breathe a sigh of relief this month as Mexico looks to restart crude exports from a hub on the Pacific coast following four months of disruptions from flooding to fire to an earthquake.
Petroleos Mexicanos lifted a force majeure on oil shipments from Salina Cruz in place since June, and the first load from the port’s crude export terminal is in progress, according to a company spokesman who asked not to be identified, citing internal policy.
The restriction came as a fire broke out at the hub’s refinery after heavy rains from Tropical Storm Calvin flooded the area in June. Just as operations were set to resume, an earthquake hit the country last month, further delaying the restart of the crude-processing facility. Without the port, crude from Mexico had to take a much longer route through the Panama Canal to reach the West Coast, increasing delivery time.
“We should see some Mexican exports move out of Salina Cruz now,” Robert Campbell, head of oil-products research at Energy Aspects Ltd. in New York, said by email. “It will be welcomed by U.S. West Coast refiners.”
Mexican crude is now likely to compete more strongly with imports to the U.S. West Coast from the Arabian Gulf, such as Kuwait and Iraq, said Andy Lipow, president of Lipow Oil Associates in Houston.
“You’ve improved the availability of Mexican crude into the West Coast market,” he said over the phone. The lifting of the force majeure allows for “additional quantities of Mexican crude to make their way to the West Coast in a more timely manner.”
As for the hub’s refinery, operations aren’t expected to restart until mid-October, said Pemex chief executive Jose Antonio Gonzalez Anaya on Wednesday.
The 330,000-barrel-a-day Salina Cruz facility, Mexico’s largest, has been out of service intermittently following the fire and flooding in June and the earthquake last month. That means that more Mexican crude is available to U.S. refiners.
“The crude that Salina Cruz would have processed is now available to West Coast markets and that has a big impact,” Lipow said.