The Obama administration has loosened a four-decade export ban on American oil, which will not allow for energy companies to sell U.S. crude overseas, the Wall Street Journal reported on Tuesday.
Sources told the Journal that federal officials authorized two energy companies to export a type of ultra-light oil, which is plentiful in the U.S. Shipments could begin as early as August.
The U.S. Commerce Department's Bureau of Industry and Security reportedly used a process known as a “private ruling” so Pioneer Natural Resources Co. of Irving, Texas, and Enterprise Products Partners LP of Houston would be allowed to export condensate, as the ultra-light oil is known. Potential foreign buyers would then turn it into gasoline, jet fuel and diesel, WSJ wrote. Both companies confirmed the new sanction.
Currently, it is legal for companies to export refined fuels (like gasoline and diesel) but are not allowed to sell oil itself overseas. The administration justified its decision by claiming ultra-light oil is minimally processed, which apparently makes it OK to be sold abroad.
It is not clear how the Commerce Department defines condensate, but the agency reportedly said the two companies have been about to improve the way it processes the crude, which therefore qualifies it to be exported.
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Initially, the shipments will probably be small but eventually up to 3 million barrels a day could be exported, industry experts told the WSJ. The amount could vary depending on what regulators determine is qualified to export.
As many as 700,000 barrels a day could potentially be exported, the Brookings Institution estimated.
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