Aggressive U.S. energy policy tests ties with European allies

WASHINGTON/BRUSSELS (Reuters) – For the administration of President Donald Trump, a policy of “energy dominance” means decreasing dependence on imported oil and selling exports to spice up the nationwide financial system and Washington’s political affect abroad.

FILE PHOTO: U.S. President Donald Trump talks with Energy Secretary Rick Perry after delivering remarks throughout an “Unleashing American Energy” occasion on the Department of Energy in Washington, U.S., June 29, 2017. REUTERS/Carlos Barria/File Photo

For lots of America’s European allies, nonetheless, it means unwelcome interference in its markets.

The Trump administration has capitalized on a decade-long U.S. drilling growth to pursue among the most aggressive overseas energy insurance policies within the nation’s historical past. So far, that has meant sanctions on oil exports from OPEC-members Iran and Venezuela and threats in opposition to companies serving to Russia construct a pure fuel pipeline into Europe.

To fill the provision hole, Washington is selling a rising wave of U.S. crude oil and pure fuel exports.

The Trump administration has billed the strikes as a approach to obtain overseas policy objectives, with the additional benefit of serving to each U.S. energy producers increase their markets and American allies diversify their provides. But Washington has irritated many European diplomats and energy corporations who resent its rising international affect on energy markets and examine its insurance policies primarily as a approach to give U.S. producers a bonus, in keeping with interviews with diplomats, executives and analysts.

Growing friction over energy is grating on trans-Atlantic ties which can be already strained by squabbles over NATO funding, commerce, local weather change and diplomatic gaffes.

“We value highly the relationship with our American partners, allies and friends,” EU Economics Commissioner Pierre Moscovici instructed reporters at a briefing in Brussels final month. “But … they should also refrain from unilateral action.”

Moscovici additionally advocated utilizing the euro in additional worldwide energy transactions, that are nearly universally carried out in U.S. .

“We are all about the diplomacy, but you have to ask at some point whether it is worth it,” mentioned one other EU diplomat, who requested to not be named.

The diplomat spoke to Reuters at a U.S. embassy get together attended by U.S. Energy Secretary Rick Perry in Brussels in June, the place a handful of different European diplomats have been sharing gripes about what they noticed as Trump’s brash, go-it-alone strategy on energy.

A senior Trump administration official, talking on situation of anonymity, mentioned the energy technique goals on the mutual advantage of the United States and its allies.

“What the U.S. energy sector is doing is unleashing our energy resources and our technologies and sharing them with our partners and allies around the world to help them diversify their energy mix and ensure reliable supply,” mentioned the official.

A Department of Energy press launch just lately referred to as U.S. fuel exports to Europe a approach to unfold “molecules of freedom” throughout the Atlantic.

The United States has turn out to be the world’s high oil producer and is on a path to turn out to be the world’s third largest exporter of pure fuel, due to a technology-led drilling growth that the Trump administration has sought to spice up by slashing environmental laws.

The United States despatched of 43.three million barrels of crude oil and merchandise to Europe within the six months led to March, a 27 % enhance from the identical interval a yr earlier, in keeping with the Energy Information Administration. Meanwhile, U.S. liquefied pure fuel exports to Europe have almost tripled since final yr, when the European Commission agreed to purchase extra in a commerce assembly with Trump.

“Increasingly, the America First framework translates into advocating for oil and gas sales around the world,” mentioned Tim Boersma, a senior analysis scholar at Columbia University’s Center on Global Energy Policy.


The unilateral U.S. sanctions on Iran and Venezuela would have triggered steep oil value will increase with out the surge in U.S. provide.

Trump’s resolution final yr to drag out of the Iran nuclear deal – which has developed into an unprecedented effort to fully block its oil exports – was opposed by Europe’s leaders and reluctantly accepted by its energy corporations, who confronted U.S. penalties together with being excluded from the U.S. monetary system.

Germany, France and the UK have since taken steps to withstand Washington, together with organising a barter-based commerce mechanism referred to as Instex that might enable it to commerce with Iran outdoors the U.S. monetary system in a method that skirts U.S. sanctions. Europe hopes to make use of Instex to permit Iran to alternate its oil and fuel or different items for medication, meals or different humanitarian provides from the EU.

“They have sovereignty and self-respect at issue here. They’re trying to say we’re going to do Iran trade; we’re going save the nuclear deal and provide a mechanism; and we don’t appreciate being unilaterally dictated to,” mentioned Sanjay Mullick, a sanctions lawyer at Kirkland & Ellis LLP.


Meanwhile, British-and Swiss-based buying and selling homes and refineries have acquired insistent calls from U.S. State Department officers warning about buying and selling oil merchandise with sanctioned nations.

Last month, for instance, Mark Saavedra, a State Department official on the bureau of energy sources, referred to as a number of European energy buying and selling homes to instruct them to not commerce jet gasoline with Venezuela, a product that was not particularly on the U.S. sanctions checklist for that nation, in keeping with three trade sources acquainted with the calls.

The U.S. has been making an attempt to dam shipments of refined fuels to the Latin American nation to stop it from mixing it with its heavy crude oil to make it extra appropriate for export, a part of an effort to ratchet up strain on socialist President Nicolas Maduro.

The sources mentioned the buying and selling homes believed the State Department had overstepped its authority.

Frank Fannon, the U.S. Assistant Secretary of State for Energy Resources, mentioned don’t count on State to place down the cellphone anytime quickly. Such requests, he mentioned, are a pleasant approach to inform allies learn how to keep away from sanctions themselves.

“It may be unwelcome news, but it’s important that we convey that clearly and unequivocally,” Fannon mentioned.


Trump has additionally hurled criticism at European nations for supporting a long-planned, multi-billion-dollar Russian fuel pipeline to Germany, the Nord Stream 2, saying it might give Moscow an excessive amount of affect over Europe’s largest financial system and threatening to sanction corporations that assist the undertaking.

That’s rubbed some EU diplomats and firms the fallacious method.

“It will be a disaster for Europe to ditch Nord Stream 2 under U.S. pressure,” mentioned Rainer Seele, CEO of energy firm OMV Austria’s largest firm and certainly one of 5 European corporations together with France’s Engie serving to to finance Nord Stream 2.

The Russian fuel through pipeline is cheaper than U.S. liquid pure fuel, he mentioned, and U.S. strain threatens “Europe’s independence and security of energy supplies.”

Some nations similar to Poland and Lithuania, nonetheless, are completely happy to purchase the incoming U.S. liquefied pure fuel shipments to assist break reliance and barter higher costs from Russian fuel export monopoly Gazprom.

FILE PHOTO: A horizontal drilling rig on a lease owned by Parsley Energy operates at dawn within the Permian Basin close to Midland, Texas U.S. August 24, 2018. Picture taken August 24, 2018. REUTERS/Nick Oxford/File Photo/File Photo

On June 12, Polish Oil and Gas Company (PGNiG) signed an settlement with U.S. firm Venture Global LNG to purchase 1.5 million metric tons of LNG a yr.

But even diplomats against Nord Stream 2 take problem with Washington’s tone and tenor, in keeping with the Reuters interviews.

“We don’t want to be dictated to,” mentioned one.

Reporting by Timothy Gardner; Additional reporting by Alissa de Carbonnel in Brussels, Dmitry Zhdannikov in London and Humeyra Pamuk in Washington Editing by Richard Valdmanis and Brian Thevenot

Our Standards:The Thomson Reuters Trust Principles.

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