Oil
U.S. Considers Lifting Crude Oil Export Ban
SEOUL—The U.S. is considering relaxing regulations that ban the export of crude oil, citing growing domestic production of oil that isn’t suitable for refining locally, U.S. Energy Secretary Ernest Moniz said Tuesday.
The U.S. is considering relaxing regulations that ban the export of crude oil as domestic production grows and the quality of some of the crude produced in the country isn’t suitable for refining locally, U.S. Energy Secretary Ernest Moniz said. Liam Denning joins MoneyBeat. Photo: Getty Images.
The statement was the most explicit yet by the Obama administration that it would push ahead with plans to study changing U.S. law to allow for exports, a contentious subject on Capitol Hill.
U.S. oil production has soared in recent years due to the use of new hydraulic fracturing technology, which has unlocked the country’s large oil- and shale-gas reserves. According to the International Energy Agency, the U.S. will become the world’s largest oil producer by around 2020.
But U.S. law prohibits most crude exports. That has caused some distortions in global and domestic energy markets, and dampened the price of oil in the U.S. compared with the rest of the world. With all that new crude, domestic bottlenecks have formed in places like North Dakota, transportation hubs like Cushing, Okla., and most recently, along the Gulf of Mexico coast, where much of the nation’s refining capacity is located.
In recent years, many U.S. refineries there have geared their production toward processing heavy oil from Latin America and Canada. Now, they are struggling to keep up with rising supplies of light, sweet shale oil from places like North Dakota and Texas.
“The issue of crude oil exports is under consideration…A driver for this consideration is that the nature of the oil we’re producing may not be well matched to our current refinery capacity,” Mr. Moniz said at a media briefing Tuesday after a two-day energy conference in Seoul. He said a study of the subject, including multiple agencies, is currently taking place.
Any discussions over potential exports will likely be drawn-out and politically fraught. Many industries have benefited from lower oil prices, and won’t be eager to compete with foreign buyers. Politicians will likely approach any change to policy with caution.
U.S. oil prices climbed as much as 0.8% in the four hours after Mr. Moniz’s remarks to a two-week high of $101.44 a barrel. The rise in prices occurred during a typically quiet time for trading on the New York Mercantile Exchange.
The idea of exporting crude has long been controversial in Washington, amid decades in which the U.S. has boosted imports to meet its domestic energy needs. But amid a boom in shale-oil production in the U.S. recently, imports have fallen, lessening worry among export critics that it could weaken U.S. energy security.
Similar worry has in recent years also clouded the debate over natural gas exports. Gas-intensive companies, like chemical makers, have said exporting America’s now-plentiful gas could jack up domestic prices. But the U.S. has moved ahead with sanctioning a number of large-scale gas export plans.
Any move by the White House to allow for significant exports would require a change in law that, since 1975, has effectively banned them. U.S. producers do ship limited amounts, mostly to Canada, but require special permits to do so.
Still, if the U.S. moves ahead, even with limited new exports, it could significantly change global markets, and affect pricing. Already, higher U.S. output has contributed to steadier global prices by replacing crude imports that can now flow elsewhere.
“The U.S. is the new king on the block in terms of increased oil production,” said Ole Hansen, head of commodity strategy at Saxo Bank.
“There is a lot at stake,” said Olivier Jakob, managing director of Swiss consultancy Petromatrix. “Globally, with the continued increase of U.S. production…the ban on U.S. crude oil exports needs to be a subject under review, but I don’t know what time frame we’re talking about.”
– WALLSTREET JOURNAL
In a strategic move to revitalize Nigeria’s oil and gas sector, the Federal Government has unveiled two key fiscal incentives aimed at attracting investment and enhancing energy security.
The announcement was made by Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy on Wednesday.
The first initiative, the Value Added Tax (VAT) Modification Order 2024, introduces critical exemptions for essential energy products and infrastructure, including Diesel, Feed Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), Electric Vehicles, Liquefied Natural Gas (LNG) infrastructure, and Clean Cooking Equipment.
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These exemptions are designed to reduce living costs for Nigerians, promote energy security, and accelerate the transition to cleaner energy alternatives.
The second initiative, the Notice of Tax Incentives for Deep Offshore Oil & Gas Production, offers new tax relief options for deep offshore exploration projects.
This measure aims to position Nigeria’s deep offshore basin as a premier destination for international oil and gas investments, boosting the country’s appeal to foreign investors.
These reforms are part of a broader set of policy initiatives, known as Policy Directives 40-42, endorsed by President Bola Ahmed Tinubu.
The directives reflect the administration’s commitment to fostering sustainable development in the energy sector and enhancing Nigeria’s competitive edge in the global oil and gas market.
By Yemie Adeoye
NIGERIA’s President Bola Tinubu has announced that the protracted ExxonMobil-Seplat upstream oil divestment will be formally approved by the Minister of petroleum within a matter of days, just as he announced his government’s intention to expand the Compress natural Gas, CNG buses initiative.
The President who stated this during his Independence day nationwide broadcast stated that the move is in line with his administration’s commitment to free enterprise, free entry and free exit in investments which is the hallmark of his administration investment policy.
“Fellow compatriots, our administration is committed to free enterprise, free entry, and free exit in investments while maintaining the sanctity and efficacy of our regulatory processes. This principle guides the divestment transactions in our upstream petroleum sector, where we are committed to changing the fortune positively. As such, the ExxonMobil Seplat divestment will receive ministerial approval in a matter of days, having been concluded by the regulator, NUPRC, in line with the Petroleum Industry Act, PIA. This was done in the same manner as other qualified divestments approved in the sector.”
The President also seized the opportunity to plead with Nigerians to be patient with his administration’s reform policies. “As your President, I assure you that we are committed to finding sustainable solutions to alleviate the suffering of our citizens. Once again, I plead for your patience as the reforms we are implementing show positive signs, and we are beginning to see light at the end of the tunnel”.
“Our energy transition programme is on course. We are expanding the adoption of the Presidential Initiative on Compressed Natural Gas for mass transit with private sector players. The Federal Government is ready to assist the thirty-six States and FCT in acquiring CNG buses for cheaper public transportation.
Fellow Nigerians, while we are working to stabilise the economy and secure the country, we also seek to foster national unity and build social harmony and cohesion. Our economy can only thrive when there is peace”. he enthused.
As part of the administration’s push to improve Ease of Doing Business (EoDB), Nigeria’s Vice President Kashim Shettima has expressed support for ExxonMobil’s plan to invest $10 billion in the country’s deep-water oil sector.
Speaking on Wednesday, September 25, 2024, during a meeting with ExxonMobil executives at the 79th United Nations General Assembly (UNGA) in New York, Shettima called the investment “a clear testament to the administration’s economic reforms and investor-friendly policies.”
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This announcement follows news that international maritime company DP World intends to develop a multibillion-dollar port project in Nigeria.
Stanley Nkwocha, Senior Special Assistant to the President on Media and Communications, shared the development in a statement on Wednesday. He quoted Shettima as saying: “ExxonMobil’s potential investment aligns with the vision of President Bola Ahmed Tinubu’s administration for a more investment-friendly Nigeria.
We are committed to fostering an environment that supports such transformative projects.”Shettima also discussed the administration’s broader efforts to improve the ease of doing business, highlighting the “Renewed Hope Agenda,” which aims to simplify bureaucratic processes, enhance transparency, and offer fiscal incentives to attract global investors.
“Our administration has taken bold steps to unify the exchange rate, remove fuel subsidies, and implement tax reforms. These measures, though challenging in the short term, are intended to create a stable and predictable business environment in the long term,” he added.
On the oil and gas sector, Shettima mentioned that the government is revising the fiscal framework for deep-water operations to attract investment while ensuring fair returns for the Nigerian people.
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