(Adds comment from Commerce Undersecretary Eric Hirschhorn in
By Valerie Volcovici
WASHINGTON, July 29 The U.S. Commerce Department
is holding requests for permission to export lightly processed
crude oil for longer than the normal two-week period so it can
gather more information, according to two sources familiar with
Reuters reported on Monday that at least three companies'
requests for "commodity classification" decisions - effectively
private interpretations of trade rules - had been marked as
"held without action." That designation allows the agency to
study the request beyond two weeks.
Sources who declined to be identified said on Tuesday they
were told by officials from the Bureau of Industry and Security
that the measure was not meant as a policy effort to slow down
exports of U.S. shale oil but was an administrative step to
allow time to get more technical specifications for each
"'Hold without action' is the categorization BIS uses when
requesting additional information from applicants or awaiting
responses," said Commerce Undersecretary Eric Hirschhorn in a
statement. "It is a standard term used as part of a standard
process to seek additional information."
As a surge in domestic shale oil production threatens to
overwhelm U.S. refiners' demand for sweet crude, the drive for
exports has accelerated swiftly this year as legislators,
lawyers and oil firms seek loopholes, exceptions or gray areas
in a four-decade ban on exports.
That effort has collided with vaguely worded legislation and
an opaque process for administering export controls, stirring up
a storm of confusion over what kind of oil can be exported and
the degree to which it must be processed to do so.
It has also thrust a once-obscure bureau within the Commerce
Department into the spotlight on a contentious issue that the
Obama Administration has yet to weigh in on. Officials have said
only that the White House is reviewing the issue.
"This is new and they (BIS) need to get their arms around
the parameters and how the rules would apply in multiple
scenarios," said one source who has knowledge of the matter.
The BIS is tasked with regulating the export of sensitive
goods by issuing licenses or clarifying whether certain goods
are exportable in a confidential process to protect the national
and economic security interests.
In the cases pending before it now, energy companies are
looking for a decision on how much processing is required to
convert the crude oil into an exportable product, such as
gasoline or diesel.
Because oil field technology and other factors can differ
widely, the decisions are being made on a case by case basis.
Sources said the BIS is being more cautious as it answers
such requests following last month's revelation that Pioneer
Natural Resources Ltd and Enterprise Product Partners LP
had been told in March that putting condensate through
an advanced stabilizer - a relatively simple type of oilfield
equipment used to strip light gasses out of oil - was sufficient
processing to export it without a license.
U.S. crude oil exports have been essentially banned by law
since the Arab oil embargo of the 1970s, unless they are sold to
Canada or have somehow been processed.
(Reporting by Valerie Volcovici; Editing by Jonathan Leff and