Page 6 - NorthAmOil Week 22 2022

NorthAmOil PERFORMANCE NorthAmOil

US LNG exports remain close to record high

US EXPORTS of US LNG remained close to record Europe, while Asian buyers accounted for 15%
highs in May, according to new data. Citing data of the total. However, there are expectations that
from Refinitiv Eikon, Reuters reported on June European demand could ease as inventories
1 that the US exported 7.29mn tonnes of LNG in are built up and warmer weather arrives on the
May, up 5.2% from 6.93mn tonnes in April and continent.
also representing a 12% increase year on year. “All factors remaining constant – such as no
The figure is the second highest on record, further cuts in Russian gas to Europe – we may
behind 7.67mn tonnes exported from the US in see a rebalance of LNG vessels away from the
March. Production of US LNG has risen to new region, which has become a black hole for LNG
highs thanks to additional liquefaction capacity – drawing in all and every available cargo,” a Rys-
starting up, including Venture Global’s Calcasieu tad Energy analyst, Lu Ming Pang, commented
Pass LNG terminal in Louisiana most recently, in a note last week.
earlier this year. But the threat of further cuts to Russian gas
This comes amid high demand against the flows to Europe continues to loom. State-owned
backdrop of the war in Ukraine as many buyers Gazprom said on May 31 that it would turn off
seek alternatives to Russian gas. Indeed, sales supply to several “unfriendly” countries that
to Europe are reported to have increased, but have refused to start paying for Russian gas in
higher exports to South America illustrate that rubles.
demand is also rising elsewhere in the world. As this continues to play out, demand for
According to Refinitiv Eikon, almost two- US LNG may not fall after all, despite previous
thirds of the cargoes exported in May went to expectations to the contrary.™

POLICY

Biden administration weighs

oil and gas windfall tax

US US President Joe Biden has been reported to be record profits, which they are primarily using
considering congressional proposals for a tax on to boost returns to shareholders, with smaller
oil and gas producers’ profits as he seeks ways to independents also seeing profits rise. The Biden
reduce the burden on consumers struggling with administration has criticised oil and gas com-
high energy prices. panies for not using their profits to invest in
The National Economic Council’s deputy additional production that it believes could help
director, Bharat Ramamurti, said there were lower prices.
“a variety of interesting proposals and design The upcoming midterm elections have
choices on a windfall profits tax”. His comments added to pressure on the Biden administration
came during a panel discussion sponsored by the to be seen as doing something to lower gaso-
Roosevelt Institute think-tank. line and energy prices as the Democrat Party’s
“We’ve looked carefully at each of them and control of Congress hangs in the balance. Biden
are engaging in conversations with Congress has already authorised the largest ever release
about design,” Ramamurti added. He warned, from the US Strategic Petroleum Reserve (SPR)
however, that the impact of any windfall tax in a bid to help lower oil prices. However, they
option on supply would need to be evaluated. He have remained above $115 per barrel for West
said that he did not consider this to be an insur- Texas Intermediate (WTI) crude, even after SPR
mountable hurdle, but nonetheless an “impor- stockpiles have fallen to their lowest level since
tant question” during a period of tight supply. 1987.
This comes as oil and gas prices have reached Calls for a windfall tax have not come from
multi-year highs, with their rise accelerated by the US alone. The UK announced a 25% windfall
the war in Ukraine. Against this backdrop, inter- tax on oil and gas producers’ profits in late May,
national oil companies (IOCs) have reported having previously rejected the idea.™

P6 www. NEWSBASE .com Week 22 02•June•2022