Mexico’s program to guarantee income from 2022 oil production was similar in size to previous years, a signal the country is not yet ready to bank on the president’s ambitious plans to cut crude exports. 

The oil hedge for this year’s exports is finished and cost within the range of the usual $1 billion price tag, said a person familiar with the matter who isn’t authorized to speak publicly on the topic. The amount of oil covered in the hedge wasn’t reduced, a second person said. In the past, the program typically covered 200 million to 300 million barrels, although the exact size of the last deal is unknown.  

President Andres Manuel Lopez Obrador aims to halt crude exports by 2023 to expand homegrown production of gasoline and diesel. Mexico currently exports most of its crude and imports refined fuels because it lacks the technical capacity to process its oil bounty. Locking in income from its oil exports helps to secure billions of dollars for Mexico’s coffers, but it can often roil financial trading because of the sheer size of the hedging required.  

The maneuver, which locks in the prices of Mexico’s net exports, is one of the biggest and most secretive deals in the oil market. Although Mexico first hedged its oil revenue during the first Gulf War, the country didn’t introduce the current annual program until a decade later. Since then, it has hedged almost every year. The deal paid off most recently in 2020, when Mexico earned $2.38 billion from the hedge as oil prices crashed.

Officials at Mexico’s central bank and the finance ministry didn’t respond to requests for comments on this story. 

Some traders had speculated the hedge would shrink as Lopez Obrador, known as AMLO, aims to make Mexico more energy self-sufficient. Petroleos Mexicanos, the state-owned oil producer, will more than halve crude exports this year as it begins to phase out sales to foreign customers, Chief Executive Officer Octavio Romero said late last year. 

However, the plan to wean itself off of exports depends on Mexico’s ability to ramp up its crude refining sector, a project that many are skeptical the debt-ridden national oil company, known as Pemex, can carry out. A cornerstone of the nation’s plan for gasoline production, a brand-new refinery in the state of Tabasco, has been beset by delays and cost overruns, according to people familiar with the matter.