Aggressive US Energy Policy Stresses Links with European Allies

WASHINGTON / BRUSSELS (Reuters) – For President Donald Trump's government, a policy of "energy domination" means reducing reliance on imported oil and promoting exports to bolster Washington's national economy and political influence. abroad.

For many European allies in America, however, this means undesirable interference in its markets.

The Trump administration relied on a decade-long US drilling boom to carry out some of the most aggressive foreign energy policies in the country's history. Until now, this implied sanctions on oil exports from OPEC member countries, Iran and Venezuela, and threats against companies helping Russia to build a gas pipeline natural towards Europe.

To fill the supply gap, Washington is promoting a growing wave of US exports of crude oil and natural gas.

The Trump administration has presented these measures as a means to achieve foreign policy objectives, while helping US energy producers expand their markets and US allies to diversify their supplies. However, Washington has angered many European energy diplomats and companies who regret its growing influence in the energy markets and view its policy as a way to give US producers an edge, according to interviews with diplomats, leaders and analysts.

Increasing energy friction grinds the transatlantic links already strained by NATO's funding wrangling, trade, climate change and diplomatic gaffes.

"We attach great importance to relations with our partners, allies and American friends," European Commissioner for the Economy Pierre Moscovici told reporters at a press briefing in Brussels. "But … they should also refrain from any unilateral action."

Mr Moscovici also advocated the use of the euro in more international energy transactions, which are almost universal in US dollars.

"We all work for diplomacy, but you have to ask yourself if it's worth it," said another EU diplomat, who asked not to be named.

The diplomat spoke with Reuters at a party at the US embassy, ​​which US Secretary of Energy Rick Perry attended in June in Brussels, where a handful of other European diplomats were offended by what they saw as an energetic and unbridled approach to Trump.

A senior Trump administration official, speaking on condition of anonymity, said the energy strategy was aimed at the mutual benefit of the United States and its allies.

"What the US energy sector does is unleash our energy resources and technologies and share them with our partners and allies around the world to help them diversify their energy mix and ensure a reliable supply," he said. the manager.

A press release from the Department of Energy recently called for US gas exports to Europe a means of spreading "molecules of freedom" across the Atlantic.

The United States has become the world's largest oil producer and is on the verge of becoming the world's third largest natural gas exporter, thanks to a technology-driven drilling boom that the Trump administration has been trying to stimulate by reducing regulations environmental.

The United States sent 43.3 million barrels of crude oil and derivatives to Europe in the six months ended March, an increase of 27% over the same period of the previous year, according to the United States. the Energy Information Administration. Meanwhile, US exports of liquefied natural gas to Europe have almost tripled since last year, when the European Commission decided to buy more at a trade meeting with Trump.

"Increasingly, the America First framework is advocating for the sale of oil and gas around the world," said Tim Boersma, Principal Investigator at the Center on Global Energy Policy at Columbia University. .

EUROPEAN RESISTANCE

Unilateral sanctions imposed by the United States on Iran and Venezuela would have caused sharp increases in oil prices without the push of US supply.

Last year, Trump's decision to withdraw from the Iranian nuclear deal – which turned into an unprecedented effort to completely block its oil exports – was opposed by European leaders and reluctantly accepted by its energy companies, which have been sanctioned by US sanctions, including their exclusion. financial system.

Germany, France and the United Kingdom have since taken measures to resist Washington, notably by setting up a trading mechanism called Instex, which would allow it to trade with Iran outside the financial system. American in a way that escapes US sanctions. Europe hopes to use Instex to allow Iran to exchange oil, gas and other goods for medicines, food or other humanitarian supplies from the EU.

"They have the sovereignty and self-esteem involved here. They are trying to say that we are going to trade in Iran; we will save the nuclear deal and provide a mechanism; and we do not like to be dictated unilaterally, "said Sanjay Mullick, a sanctions lawyer at Kirkland & Ellis LLP.

SQUABBLES ON SANCTIONS

At the same time, trading companies and refineries based in Britain and Switzerland have received urgent appeals from US State Department officials warning against trade in petroleum products with sanctioned countries.

Last month, for example, Mark Saavedra, head of the energy resources department at the Bureau of Energy Resources, called on several European energy trading companies to ask them not to exchange fuel with Venezuela, a product not not specifically listed on the US sanctions list. country, according to three industry sources familiar with the calls.

The United States has been trying to prevent shipments of refined fuels to this Latin American country in order to prevent it from mixing it with its heavy crude oil to make it more fit for oil. 39, with the aim of increasing pressure on Socialist President Nicolas Maduro.

The sources said the business houses thought the State Department had overstepped its powers.

Frank Fannon, US Deputy Secretary of State for Energy Resources, said he did not expect the state to hang up on the phone anytime soon. Such requests, he said, provide a friendly way to tell allies how to avoid the sanctions themselves.

"This may be bad news, but it is important that we convey this clearly and unequivocally," said Fannon.

FIGHT AGAINST A RUSSIAN PIPELINE

Trump also criticized European countries for supporting the Russian Nord Stream 2 gas pipeline, a long-standing, billion-dollar Russian pipeline that would give Moscow too much influence over the biggest economy in the world. Europe and threaten to sanction the companies the project.

Some diplomats and EU companies were mistreated.

"It's a catastrophe for Europe to leave Nord Stream 2 under pressure from the United States," said Rainer Seele, CEO of Austria's largest energy company OMV Austria and one of five companies. including Engie, which financed the Nord Stream 2.

Russian piped gas is cheaper than US liquefied natural gas, he said, and US pressure threatened "the independence of Europe and the security of supply in Europe. energy".

Some countries, such as Poland and Lithuania, are however happy to buy US shipments of liquefied natural gas to avoid dependency and to barter better prices from the Russian gas export monopoly, Gazprom.

On June 12, the Polish oil and gas company (PGNiG) signed an agreement with the US company Venture Global LNG for the purchase of 1.5 million metric tons of LNG per year.

But even diplomats opposed to Nord Stream 2 dispute the tone and tone of Washington, according to Reuters interviews.

"We do not want to be dictated to," said one.