Xinhua News Agency, Washington, January 14 (International Observation) U.S. Oil and Gas Industry Takes advantage of Ukrainian crisis to make a fortune
Xinhua News Agency reporter Xu Yuan and Deng Xianlai
It has been nearly a year since the Ukraine crisis escalated. The United States pushed its European allies to impose severe economic sanctions and even an energy embargo on Russia in an attempt to strangle Russia’s economic lifeline, which seriously disrupted the global energy supply chain. International observers believe that European countries are highly dependent on Russia’s energy supply and have encountered a more serious energy crisis due to the “decoupling” of Russian energy. American energy companies have taken the opportunity to sell a large amount of high-priced oil and gas to Europe and make a lot of money.
According to the latest data from market research firm Kepler, in the context of the escalating crisis in Ukraine, natural gas transmission channels of Russia-Europe pipelines have been restricted, and the demand for liquefied natural gas (LNG) in the EU has surged. In 2022, EU LNG imports will reach an all-time high of 94.73 million tons, much higher than the 57.27 million tons in 2021. Among them, the EU’s LNG imports from the United States accounted for 41% of the total imports last year, reaching 38.86 million tons, an increase of 23.59 million tons compared with 2021, and a year-on-year increase of 154%.
In fact, there are already traces of the United States keeping a close eye on European gas demand. In March last year, the United States took the initiative to encourage its European allies to restrict Russian oil and gas imports, promising to increase exports of liquefied natural gas to the EU by at least 15 billion cubic meters that year.
According to data from the U.S. Energy Information Administration, the United States will become the world’s largest exporter of liquefied natural gas in the first half of 2022, with exports increasing by 12% compared with the second half of 2021, mainly driven by surging demand in Europe.
Matt Smith, an analyst at Kepler, predicts that U.S. LNG exports are expected to continue to grow in 2023, given that Europe will replenish inventories depleted in winter, which also means that the U.S. will continue to remain Europe’s largest natural gas supplier.
From the perspective of oil, the sanctions imposed by the United States and the West on the Russian energy industry have led to a sharp drop in Russian crude oil exports, and the demand for alternative crude oil in the international market has increased significantly. Rohit Ratod, a market analyst at Wotexa Consulting, an energy research firm, pointed out that the crisis in Ukraine has brought more new demand for energy in the United States.
The supply of oil and gas from the United States will help temporarily alleviate the urgent need of the European energy crisis, but the price of liquefied natural gas transported by the United States to Europe by sea is more expensive than that of Russian pipeline natural gas, and the price has risen sharply under the influence of the Ukraine crisis. Europe paid a higher price for alternative energy, most of which flowed into the pockets of the United States, helping the US oil and gas industry to resolve difficulties and achieve a substantial increase in income.
U.S. LNG export revenue soared to $35 billion from January to September 2022, compared with $8.3 billion in the same period in 2021, according to the U.S. Energy Information Administration.
During the same period, Chesapeake Energy, a US shale oil and gas company, made a profit of US$1.3 billion. As early as 2020, affected by the new crown epidemic, the company’s income was almost dried up, and it once filed for bankruptcy protection. Shares of U.S. energy giant Chevron rose 50.5% last year, in stark contrast to the 20% decline in the S&P 500 as a whole over the same period.
The practice of the United States taking the opportunity to sell energy to European countries at high prices has aroused a lot of criticism. After attending the EU summit in October 2022, French President Emmanuel Macron publicly accused the United States of selling oil at low prices domestically and dumping oil at high prices in Europe, saying that the United States obtained excess profits from geopolitical struggles, and the price of natural gas sold to Europe was lower than that of the United States. The market price is 3 to 4 times higher. German Vice Chancellor and Minister of Economy and Climate Protection Habeck has alluded to the U.S. taking advantage of the Ukraine crisis to make a fortune.
In fact, the Ukrainian crisis is just a footnote to America’s global energy peddle. For a long time, it has been the consensus of the US Congress and the government to use energy exports as a bargaining chip in foreign policy.
As early as February 2020, the then U.S. Secretary of Energy Dan Brouillette said at an event held by the American think tank Atlantic Council that after the U.S. transforms into a net energy exporter, U.S. foreign policy will undergo revolutionary changes. Goals that were previously unattainable can be pursued without fear.”
