Geopolitical Tensions Position U.S. As Leading Oil, Gas Supplier

U.S. energy exporters have the opportunity to seize more market share amid economic strife and geo-political tensions in hot spots in Latin America and the Middle East, and amid efforts in Europe to break its reliance on Russian natural gas, industry and government leaders said in mid-March at the annual CERAWeek energy conference in Houston, as reported by S&P Global
Platts.

Instability from hyperinflation and infrastructure deterioration in Venezuela, restrictions on oil shipments from Iran, and the prospect of additional sanctions on Russia are prompting investors, producers, shippers, and consumers to take a hard look at U.S. resource abundance to fill the gaps.

Noted was that the U.S. has its own trade barriers, due on large part to tensions with China. Overall, however, the relative stability in the U.S., from production to delivery, provides options for global policymakers and market participants, officials from the U.S. and Europe said during a panel discussion at the event, hosted by IHS Markit. “The U.S. gas volumes can help, certainly, and we anticipate that,” said Francis Fannon, assistant secretary at the U.S. State Department’s Bureau of Energy Resources.

He outlined the Trump administration is participating in a ministerial dialog that began in January in Oman focused on energy economics in an effort to address the core interests of importing and exporting countries. Fuel alternatives are a key topic. “The Middle East is known for oil, but this is not just about oil,” he said. “That’s an outdated approach. All of these countries have one domestic initiative—seeking to diversify their supplies.”

The U.S. is already a major supplier of LNG to the world, and the nation is poised to become a bigger player as new liquefaction capacity comes online this year and next year, and when yet more enters service in the early and mid-2020s. The U.S. is also boosting pipeline natural gas flows to Mexico, which is heavily reliant on American supplies for electrical power generation and home heating fuel use.

Some members of Congress, including U.S. Sen. Lisa Murkowski (R-Alaska), are pushing for comprehensive legislation that would promote U.S. energy innovation. She also has advocated for changes in the permitting process to allow energy projects to proceed more quickly, a subject she addressed during a discussion at CERAWeek.

Europe is looking to take greater advantage of energy trends by importing more natural gas from the U.S., in part to reduce Russia’s grip on flows to the continent. The possibility of further U.S. sanctions on Russia gives market participants another reason to consider U.S. supplies. “For most of the last decade, to the extent the U.S. was flexing its muscle using its energy position to make sanctions for political purposes, it was looking at oil,” said Elizabeth Rosenberg, a senior fellow at the Center for a New American Security, a Washington, D.C.-based think tank. “Now it is looking at gas.”

(SOURCE: The Weekly Propane Newsletter, April 8, 2019)