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February 14, 2014

U.S. Approved the First Oil Re-Export to Europe

From Oilprice.com
With the debate over whether to lift the 40-year-old ban on US crude exports gaining momentum, news that the US government has approved the first licenses in years to re-export crude to Europe has caused a flurry of speculation that this might be the next step towards easing the crude export ban. Before we jump the gun, however, this was the big news last week:
According to an exclusive report from Reuters based on information obtained from a Freedom of Information Act request, the Department of Commerce has granted two licenses to export crude to the UK since last year and two licenses to import crude to Italy, while a fifth license for crude exports to Germany was applied for last month.
These licenses are reviewed and approved by the Bureau of Industry and Security (BIS), which reportedly has approved 120 licenses since January 2013, most of them for exports to Canada. What are they worth? UK exports under these two licenses have been worth about $1.8 billion, while exports to Italy have been worth about $3.12 billion. If the Germany license is approved, that will add another $2.6 billion in otherwise banned exports to the list.
But what we’re really looking at is foreign crude that is being re-exported from the US to Europe—not exports of US crude. This is a point the government was quick to clarify, in another Reuters report.
What Reuters is now suggesting is that these new crude re-export licenses may “add to the 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”.
Perhaps, if US natural gas exports to non-FTA countries are anything to go by.
Natural gas exports, too, remain in question. Republican leaders on the House Energy and Commerce Committee are urging the administration to hasten the pace at which it approves natural gas exports. So far, the US Department of Energy has approved five applications to export natural gas to non-FTA countries in the past two years. Over 20 applications are said to remain in process.
The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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