Trump-led oil & gas export boom may go bust in Europe trade spat: Maguire
Repeats item published earlier in the global day
By Gavin Maguire
LITTLETON, Colorado, Nov 8 (Reuters) -Oil and gas producers in the United States expect to find it easier to ramp up production and exploration under the incoming second administration of Donald Trump. Finding local and lucrative markets for their wares may be the bigger challenge.
Producers expect the new administration to streamline permit processes relating to fossil fuel extraction and distribution that should result in a climb in U.S. oil and natural gas output, which is already at record highs.
That bodes well for firms that export liquefied natural gas, crude oil and refined fuels and will likely encourage further growth in U.S. export capacity of those products.
However, energy exporters also run the risk of getting caught in trade-related crossfire should Trump's plan to impose steep tariffs on a slew of imported goods trigger retaliatory responses in consumer markets.
EUROPEAN TARGET
European nations are particularly likely to be targeted with tariffs by the incoming administration as the long-standing U.S. trade deficit with Europe - around $240 billion annually - is a major irritant for Trump allies.
President-elect Trump said last month that Europe would "pay a big price" for not buying enough American exports and has threatened to impose blanket tariffs on European goods.
However, Europe is also the single largest market for both U.S. LNG and crude oil exports, accounting for 49% of all U.S. LNG shipments and 47% of U.S. crude exports this year, according to ship-tracking data from Kpler.
Since Russia's invasion of Ukraine in 2022, Europe has had to import record volumes of fuels and oil from other suppliers, and the U.S. has been the main beneficiary by shipping out record volumes of those commodities.
In 2023, U.S. LNG export revenue was over $30 billion and two-thirds of all U.S. LNG shipments went to Europe, according to the U.S. Energy Information Administration and Kpler.
The U.S. exported around $10 billion of crude oil in 2023, with just under half sent to Europe, EIA data showed.
BIG MONEY
Those U.S. LNG and oil shipments have resulted in a profit boom for U.S. exporters and valuable tax revenue for the U.S. Treasury which the next administration will want to protect.
However, the high price tag of energy imports has also hurt European consumers and is accelerating Europe's energy transition away from fossil fuels.
A slowdown in economic activity has also curbed industrial gas use and power consumption and has triggered a more than 20% drop in Europe's LNG imports over the first 10 months of 2024 from the same period of 2023.
Europe's imports of U.S. crude oil have climbed to a record so far in 2024 but the continent's overall crude imports have contracted by around 1%, showed data from Kpler.
This indicates that European energy product importers have scope to reduce purchases of U.S. LNG and crude as overall gas use remains stunted while crude supplies from alternative sellers are abundant.
IN THE CROSSHAIRS?
European policymakers are already planning responses to Trump's intended tariff impositions, wary of a potential deterioration in economic ties with a key trade partner while embroiled in a trade spat with China.
Trade experts in Brussels - home to the European Union's policy arm - will want to avert any further souring in the region's economy and will likely seek to maintain strong ties with the U.S. during Trump's next term.
However, they will not shy away from proposing tariff measures of their own during negotiations, if only to avert being steam-rolled by blanket tariff threats from the U.S.
U.S. energy products are likely to be an attractive option for retaliatory tariffs as Europe can readily source LNG and oil from other keen sellers and thereby hurt U.S. suppliers without harming their own consumers.
U.S. RISK
On paper, U.S. energy product exporters could redirect cargoes to other buyers if Europe somehow becomes shut off during a trade scuffle.
But in reality, the loss of European buyers would be a heavy blow to U.S. firms, especially LNG exporters.
All current U.S. LNG export terminals are located on either the East Coast or in the U.S. Gulf and so are better situated to service a Pan-Atlantic trade route than across the Pacific to buyers in Asia.
The U.S. to Europe journey is also only a fraction of the distance and time to major buyers in Asia.
The roughly 12-day trip from Cove Point LNG terminal in Maryland to Wilhelmshaven in Germany - a major European LNG import hub - is a third of the time of the trip to Guangdong in China, the world's largest LNG buyer.
Longer journeys mean longer turnaround times for LNG sellers, who need speedy vessel turnover to maximise revenue.
So while U.S. sellers could feasibly maintain total export volumes by redirecting cargoes if Europe became off limits, they would most likely incur sharply higher shipping costs and longer return times if they had to go to Asia instead.
Crude sellers would face similar woes if European buyers also opted for other sellers as global oil consumers are already well served by exporters from the Middle East and elsewhere.
This means that while U.S. energy exporters can expect to boost output volumes under the next administration, they also face a growing risk of a trade skirmish with key European buyers that may make selling those extra volumes a challenge.
<The opinions expressed here are those of the author, a columnist for Reuters.>
Europe is the largest market for U.S. liquefied natural gas and crude oil exports https://tmsnrt.rs/3CmzVHu
The US trade deficit with Europe has averaged $240 billion/year since 2019 https://tmsnrt.rs/4fBKsNb
Reporting by Gavin Maguire; Editing by Christopher Cushing
تازہ ترين خبريں
دستبرداری: XM Group کے ادارے ہماری آن لائن تجارت کی سہولت تک صرف عملدرآمد کی خدمت اور رسائی مہیا کرتے ہیں، کسی شخص کو ویب سائٹ پر یا اس کے ذریعے دستیاب کانٹینٹ کو دیکھنے اور/یا استعمال کرنے کی اجازت دیتا ہے، اس پر تبدیل یا توسیع کا ارادہ نہیں ہے ، اور نہ ہی یہ تبدیل ہوتا ہے یا اس پر وسعت کریں۔ اس طرح کی رسائی اور استعمال ہمیشہ مشروط ہوتا ہے: (i) شرائط و ضوابط؛ (ii) خطرہ انتباہات؛ اور (iii) مکمل دستبرداری۔ لہذا اس طرح کے مواد کو عام معلومات سے زیادہ کے طور پر فراہم کیا جاتا ہے۔ خاص طور پر، براہ کرم آگاہ رہیں کہ ہماری آن لائن تجارت کی سہولت کے مندرجات نہ تو کوئی درخواست ہے، اور نہ ہی فنانشل مارکیٹ میں کوئی لین دین داخل کرنے کی پیش کش ہے۔ کسی بھی فنانشل مارکیٹ میں تجارت میں آپ کے سرمائے کے لئے ایک خاص سطح کا خطرہ ہوتا ہے۔
ہماری آن لائن تجارتی سہولت پر شائع ہونے والے تمام مٹیریل کا مقصد صرف تعلیمی/معلوماتی مقاصد کے لئے ہے، اور اس میں شامل نہیں ہے — اور نہ ہی اسے فنانشل، سرمایہ کاری ٹیکس یا تجارتی مشورے اور سفارشات؛ یا ہماری تجارتی قیمتوں کا ریکارڈ؛ یا کسی بھی فنانشل انسٹرومنٹ میں لین دین کی پیشکش؛ یا اسکے لئے مانگ؛ یا غیر متنازعہ مالی تشہیرات پر مشتمل سمجھا جانا چاہئے۔
کوئی تھرڈ پارٹی کانٹینٹ، نیز XM کے ذریعہ تیار کردہ کانٹینٹ، جیسے: راۓ، خبریں، تحقیق، تجزیہ، قیمتیں اور دیگر معلومات یا اس ویب سائٹ پر مشتمل تھرڈ پارٹی کے سائٹس کے لنکس کو "جیسے ہے" کی بنیاد پر فراہم کیا جاتا ہے، عام مارکیٹ کی تفسیر کے طور پر، اور سرمایہ کاری کے مشورے کو تشکیل نہ دیں۔ اس حد تک کہ کسی بھی کانٹینٹ کو سرمایہ کاری کی تحقیقات کے طور پر سمجھا جاتا ہے، آپ کو نوٹ کرنا اور قبول کرنا ہوگا کہ یہ کانٹینٹ سرمایہ کاری کی تحقیق کی آزادی کو فروغ دینے کے لئے ڈیزائن کردہ قانونی تقاضوں کے مطابق نہیں ہے اور تیار نہیں کیا گیا ہے، اسی طرح، اس پر غور کیا جائے گا بطور متعلقہ قوانین اور ضوابط کے تحت مارکیٹنگ مواصلات۔ براہ کرم یقینی بنائیں کہ آپ غیر آزاد سرمایہ کاری سے متعلق ہماری اطلاع کو پڑھ اور سمجھ چکے ہیں۔ مذکورہ بالا معلومات کے بارے میں تحقیق اور رسک وارننگ ، جس تک رسائی یہاں حاصل کی جا سکتی ہے۔
