Pemex cancels 10M barrels of exports

Mexican state oil monopoly Petroleos Mexicanos said it expects shipments of 10 million barrels in crude oil exports to be canceled after Hurricane Rita roared through the U.S. Gulf Coast.

Despite the disruption, Pemex said Sept. 28 the company will maintain its crude production of roughly 3.4 million barrels a day, since the company has been able to store the homeless crude or find new buyers for it in Europe, Asia and even parts of the United States.

Pemex is the world’s third-biggest oil producer and a major supplier to the United States. However, the company lacks refining capacity to process all of its crude, so it exports more than half of its daily production, mostly to the United States.

According to Pemex financial documents, the company has contracts to send 370,000 barrels per day of crude to Texas refineries affected by Rita.

Exxon Mobil Corp. has reportedly declared force majeure on half a dozen cargoes of Mexican Maya crude. Pemex has contracts to send 65,000 bpd to Exxon’s 557,000 bpd Baytown refinery, which is still restarting.

The worst-hit of Pemex’s Texas clients is Valero Energy Corp.’s 255,000 bpd Port Arthur refinery, where the Mexican company sends 165,000 bpd. Valero hopes the facility will be running again by late-October.

Because it lacks refining capacity to meet domestic gasoline demand, Pemex imports about 150,000 bpd, or nearly a quarter of the gasoline consumed in the country.

The shipment disruptions caused Rita are in addition to the 130,000 bpd in crude deliveries Pemex has had to divert from Chevron Corp.’s Pascagoula, Miss., refinery after Hurricane Katrina.

Chevron plans to partially restart the 325,000 bpd Pascagoula refinery in mid-October and to have it fully operational by mid-November.

A dozen refineries accounting for 18 percent of U.S. capacity remain shuttered in the wake of Hurricanes Rita and Katrina and have no firm, near-term date for restarting.

Pemex has already substantially increased the discount it offers on its heavy Maya crude, which requires special technology to refine. Many of those specialized refineries are along the U.S. Gulf Coast.

—The Associated Press