By Jessica Resnick-Ault
NEW YORK, Feb 2 (Reuters) - Just as the Obama administrationis starting to pull down barriers to exporting an abundance ofU.S. shale oil, the topsy-turvy global oil markets have thrownup new ones.
The stunning 60 percent collapse in oil prices since lastsummer has upended the relationship between regional markets,briefly pushing U.S. benchmark prices above those for globalBrent crude - and effectively closing the arbitrage forexporting processed condensate just as U.S. export regulatorsbegan giving some firms the green light to press ahead.
For the moment, that's proving to be a less profitableprospect than many expected. Enterprise Products Partners, which had gained a jump on rivals with export clearancelast summer, failed to award a one-year tender to sell processedcondensate after a round of low bids, U.S. and Asian tradesources said last week.
"The export boom has been postponed," said John Auers, aconsultant at Turner, Mason & Co. in Dallas.
It's been a tumultuous period for would-be exporters. Just afew months ago, dozens of producers were locked in a federalqueue waiting for confirmation that they could press ahead withsales of lightly processed shale condensate. In late December,U.S. regulators began giving some firms such as Royal DutchShell the green light to go ahead.
But as oil prices collapsed, some who secured thesought-after exemption from the four-decade-old export ban arefinding it more difficult to find buyers for their crude.
Last month, Conoco Chief Executive Ryan Lance told reportersthat the company was seeking permission to export condensate,but acknowledged that now might not be the right time to exportcondensate.
The advantage for sending condensate to Asia has been closedsince a cargo was sold to Shell Singapore for October loading.The U.S.-Asia route was uneconomical because of high freight andcheaper Mideast alternatives.
Since then, sellers have been focusing their efforts onEurope with several cargoes loading since November sent toRotterdam and France, according to traders.
TEMPORARY CLOSURE?
Some analysts say the current inversion in prices is likelyto be short-lived. As U.S. oil stockpiles begin to fill withsurplus crude, and OPEC is showing no signs of cutting itoutput, the pressure on domestic markets will soon intensify -re-opening a profitable arbitrage to other markets.
Demand may come not only from traditional refiners andpetrochemical firms in Asia and Europe, but from heavy oilproducers like Mexico that want to blend the ultra-light U.S.oil with their own production.
"I think this is a transitional period," says globalcommodities strategist Ed Morse at Citi. "The dynamic is thereto have an open arb on a pretty permanent basis."
Others say the economics may be diminished for years.
As the lowest oil prices in six years are expected to haltthe U.S. shale boom by the middle of this year, thefour-decade-old export ban -- at the forefront of the minds ofoil producers and lawmakers last year -- has become lessrelevant, likely easing the pressure from energy producers.
"The pressure on Washington to change export policy is goingto change in current market conditions," Auers said.
He says the anticipated flood of crude oil exports has beenpushed back by up to four years to 2018-2019, when U.S. oilproduction may resume its march toward over 10 million barrelsper day (bpd).
Until then, Washington may be able to maintain itsdecades-old policy as producers see little economic advantage tobe gained from lobbying for change.
Enterprise has boosted exports of U.S. condensate to 40,000bpd after signing two annual contracts with Petro-DiamondSingapore and Vitol..
Analysts forecasting output in the middle of last year,before oil prices crashed, said condensate exports could reachup to 300,000 barrels a day by the end of the year, and doublein 2015.
Now, those figures have declined as analysts mark downexpectations of new U.S. supply, which had been running at some1 million bpd for the past three years.
"We think that the rate of growth by the end of this year isgoing to be zero, which makes the whole crude export issue muchless substantively relevant than it was six or 12 months ago,"said Pavel Molchanov, an energy analyst at Raymond James. (Additional reporting by Catherine Ngai, Florence Tan andMarianna Parraga; Editing by Sandra Maler)
