By BEN LEFEBVRE
HOUSTON -- US refiners will soon expand their growing fuel
export business to include gasoline sales to West Africa,
Valero Energys CEO Bill Klesse said Thursday.
US refiners have been able to process the discounted oil and
natural gas available from the US energy boom into fuels priced
below those made by foreign competitors.
The domestic energy boom has helped revive businesses in an
industry that had been living on razor-thin margins for
Even as domestic fuel demand remains flat because of higher
vehicle fuel efficiency and a lagging economy, demand has grown
for US gasoline in Latin America and diesel in Europe.
The US will soon be able to export gasoline to West Africa,
"You will see gasoline move to West Africa from the Gulf
Coast," Klesse told an audience at the UBS Global Oil and Gas
Conference. "That's something we haven't seen before."
Valero, the largest independent refiner in the US, will
increase its diesel production to about 40% of total fuel
output to take advantage of foreign demand, Klesse said.
"We continue to see distillates exported into the
marketplace, and the world is paying up," Klesse said.
US fuel net exports averaged 840,000 bpd for the first three
weeks of May, according to the US Energy Information
That compares to net imports of 464,000 bpd during the same
time last year.
Increasing US production of light, sweet crude oil in south
Texas and North Dakota has pushed down raw material costs for
Domestic oil production will eliminate the need for imports
of light, sweet crude into the US Gulf Coast by the beginning
of 2014, Klesse said. That's a year earlier than most analysts
"The oil is coming, and it's coming significantly," Klesse
US refiners are also benefiting from low prices of natural
gas, which they use to make fuel blendstocks. Natural gas
prices have sunk to a decade-low as the boom in production has
created a massive supply surplus.
The low price in natural gas has helped the US refining industry defend itself even
as mega-refineries topping 1 million bpd of production are
built in Asia.
Although Reliance Industries in India and other mega-refineries have
a huge advantage in production scale, they pay much higher
prices for natural gas and oil than their US competitors,
"Everyone was concerned that Reliance was going to swamp
us," Klesse said. "That hasn't happened. The competitive
advantage of natural gas is absolutely huge."
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