U.S. to lift ban on oil exports to Mexico

WASHINGTON, Aug. 14 (UPI) -- The U.S. Department of Commerce on Friday told Congress it plans to approve contracts to export crude oil to Mexico, lifting a four-decade, unofficial ban on selling oil south of the border.

The first such contract would allow Mexico's national oil company, Petróleos Mexicanos SA, to enter into agreements with U.S. companies to exchange oil, officials familiar with the matter told The Wall Street Journal. Pemex, as the company is known, seeks to send heavier crude to the United States in exchange for lighter oil.

The details of the Pemex contract were not revealed Friday, but in the past the company has sought to send 100,000 barrels of crude to the United States per day.

The Commerce Department's move doesn't require any new legislation -- existing laws allow trade between the two countries on a case-by-case basis. It also doesn't change restrictions on exporting oil to other countries, a senior official told the Houston Chronicle.

American shale drillers should benefit from the new exports after a recent glut in oil has helped drive prices down over the past year -- domestic oil production has grown to more than 9 million barrels a day.

Rep. Henry Cuellar, D-Texas, a supporter of relaxing restrictions on the oil trade with Mexico, said the move would help Texas oil producers.

"These swaps will further positively impact energy exploration in Texas and the United States," he said in a statement. "The U.S. and Mexico have a great relationship when it comes to trade and commerce, and today's announcement is a clear sign that both countries are eager to further develop their energy sectors."