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NorthAmOil                                    COMMENTARY                                          NorthAmOil




       Bill advances to prevent China





       buying oil from US SPR







       The  US House of Representatives has passed a bill to prevent China from

       buying crude from the US Strategic Petroleum Reserve amid continued Sino-

       American tensions



        US-CHINA         THE US House of Representatives has passed a
                         bill to stop China from buying oil from the US
       WHAT:             Strategic Petroleum Reserve (SPR).
       The US House of     This comes as the US continues to grapple
       Representatives is   with high domestic prices and inflation, as
       moving to restrict   well as an ailing economy. The country has also
       Chinese purchases of   become concerned about China’s slide back into
       SPR crude.        authoritarianism under President Xi Jingping
                         and its continued status as a political adversary.
       WHY:              Most recently this has played out in relation to
       The Republican Party   Russia’s war in Ukraine and tensions with the
       is keen to assert itself   West over Taiwan .
       politically after regaining
       control of the House.  Policy push
                         Against this backdrop, there have been sugges-
       WHAT NEXT:        tions that LNG exports to China may be in the
       There has been    crosshairs in Congress sooner rather than later.
       speculation that   The newly Republican-led House of Represent-
       Congressional     atives is trying to put its stamp on US policy as
       Republicans could take   quickly as possible. Oil and gas sales have not
       issue with booming LNG   previously been seen as a strategic issue, but
       exports to China.  more of a way for the US to benefit long-term
                         from the Chinese economy.
                           The SPR bill passed easily in the House – led                          US President Joe Biden
                         by Republicans by a narrow margin – by 331                               has been accused
                         to 97 votes. While all the “no” votes came from  been accused by Republicans of politicising sales   by Republicans of
                         Democrats, 113 Democrats nonetheless sided  of crude from the SPR ahead of the midterm   politicising sales of
                         with the Republicans.                elections in early November. He had also been   crude from the SPR.
                           According to the House draft of the bill, the  castigated by Republicans – unfairly as it turns
                         US Department of Energy (DoE) would be pro-  out –  for allowing higher sales to China.
                         hibited from selling oil from the SPR to compa-  In the first nine months of 2022, US oil
                         nies that are owned or influenced by the Chinese  companies sold nearly 67mn barrels of crude
                         Communist Party. Such a measure could be  to China. Exports to China have, however,
                         far-reaching given that much of the economy in  dropped and instead the country has been buy-
                         China is government-controlled.      ing more oil from Russia, which has become a
                           Representative Cathy McMorris, the new  closer economic ally since Moscow invaded
                         Republican head of the House Energy and  Ukraine in February.
                         Commerce Committee, said after the SPR vote:   But in 2020, the US exported  far more crude
                         “Draining our strategic reserves for political  – 176mn barrels – to China under former US
                         purposes and selling it to China is a significant  President Donald Trump.
                         threat to our national and energy security. This   Crude exports have been on rise since
                         must be stopped.”                    2015, when Congress, at the time controlled
                           The SPR bill’s future in the Senate, which  by Republicans, lifted a 40-year export ban
                         remains under Democrat control, is uncertain.  on crude under former US President Barack
                         Indeed, the bill could be changed in the Senate.  Obama. Since then, the US has tried to bolster
                           US President Joe Biden – a Democrat – has   global energy exports, including those of LNG.



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