This time, another rift has opened up between the president of the US oil and gas industry and President Trump. This time, we look at new rules designed to encourage domestic shipbuilding and undermine China's maritime strength.
This month, the Trump administration issued rules requiring at least 1% of natural gas shipped overseas in 2029 to be mounted overseas. The United States is the top global exporter of liquefied natural gas. This is cooled until it becomes liquid so that it can be transported in large quantities. However, it does not build a specialized ship that will be used to send that fuel overseas.
In a letter to the administration last week, the American Petroleum Institute, the leading trade association for the US oil and gas industry, said the industry was unable to follow the rules and would urge officials to reconsider it.
“The risks against the significant advances the Trump administration has made towards reducing uncertainty and unleashing USLNG,” the trade group said in a letter to energy secretary Chris Wright and interior secretary Doug Burgham.
Maritime rules are the source of the latest tensions between oil and gas executives, many of which have contributed to Trump's campaign – and the administration. The industry is lined up with Trump on an array of key priorities, including exports of more LNG
But when it comes to trade, oil and gas companies generally support a more open arrangement, as opposed to Trump's protectionist agenda. His policies also weakened economic confidence and lowered crude oil prices. Many natural gas producers are also involved in the oil business.
Compared to the $78 just before Trump took office, oil is currently selling in the US for around $62 per barrel. Natural gas prices have also fallen, but far outweighed the ones a year ago.
Transport Secretary Sean Duffy proposed on Monday that there is room for further negotiations on transportation rules.
“Listen to what oil and gas have as their concerns and listen to them. But we have to find a way forward to build a ship in the United States to send America's great energy to the world,” Duffy said when he visited the Hanwha Philly Shipyard in Philadelphia when asked about industry concerns.
Korean defense technology company Hanwha Systems and Korean shipbuilder Hanwha Ocean purchased and plan to modernize the Philadelphia shipyard last year. Hanwha Ocean delivered 200 LNG carriers from a Korean shipyard. Such vessels are primarily built in the country, Japan and China.
J. Elizabeth Peace, a spokesman for the Ministry of Home Affairs, declined to comment on the trade group letter previously reported by the Financial Times.
The American Petroleum Institute praised other actions by the Trump administration, including those aimed at enabling more LNG to be exported.
“Balanced, we have made great strides to ensure that America's long-term energy domination continues,” said Amanda Eversore, the group's chief advocacy officer, on Monday.
In addition to requiring the use of US-built LNG vessels, the new regulations charge charges on Chinese-owned and Chinese-made vessels. The rules came from a petition filed by the union during the Biden administration calling for a federal investigation into Chinese shipbuilding. Shortly before Trump took office, the Biden administration said the investigation found China was using unfair trade practices, such as subsidies, to become dominant in shipbuilding.
The agency behind the new regulations, which is US trade representative, has softened previous proposals after turbulence from many industries and trade groups, including the American Petroleum Research Institute.
However, the Energy Group has said the latest version of the rule that requires 1% of LNG exports to be carried on US-built ships in 2029 would require it to rise to 15% in 2047. The Industry Association estimated that five US-built LNG tankers would be needed in 2029, and said it was “not feasible” to build them, citing other concerns, including a shortage of shipyard capabilities and skilled workers.
However, the rules appear to include a way that companies will postpone the way that they will use them for three years if they order and adopt the delivery of US-built ships during that time.
