As the US recently lifted its 40-year ban on the export of crude oil, the first shipment of oil has already reached Europe. The cargo has been sold to Vitol, the commodity trading company based in Switzerland. The light, low-sulfur type of crude, abundant in US shale fields, is favoured by many European refineries that are not equipped to handle heavier grades of oil, so this makes US crude oil all the more attractive to many European buyers.
Meanwhile, in a few days, Cheniere Energy Sabine Pass facility on the Gulf coast will be the first to export LNG from US shale fields. When fully operational before 2019, Sabine Pass will be able to export 3.5 Bcf/a day. Cheniere plans to add production trains every six months until mid-2019. The US, after Qatar and Australia could become the third largest global supplier of LNG by 2020, and the US Department of Energy has already approved projects that may send as much as 10 Bcf a day of US gas abroad, whilst it considers further applications. The US gas industry, has it should be remembered, a big advantage over its’ competitors in Europe and North-East Asia, where gas prices have been 2-3 times higher.
CEEP, as well as its Chairman of the Board of Directors, Paweł Olechnowicz, had long advocated for the ban on crude oil to be lifted, and an article in the CEEP Report (last November), outlining his speech, as the special guest, to the American Exports Breakfast Seminar, where the US’s top energy representatives were gathered, made it clear that the necessary infrastructure in Central Europe already existed for receiving crude oil imports. Mr. Olechnowicz enthusiastically stated that: “we eagerly await the lifting of the US ban on exports of crude oil. This will have both a direct and an indirect impact on Central European countries”. He explained that access to cheaper crude oil would be important for the competitiveness of Europe’s refining sector, and the lower prices of oil would benefit the trade balances of European countries, whilst increasing the purchasing power of their citizens.
However, CEEP had been campaigning on this issue, long before the notable Washington meeting, reminding the US that Central Europe is a significant market, with a population exceeding 100 million consumers, and that the lifting of the 40-year ban would present the US and Europe with ‘a win-win situation’. In June, 2015, at a Brussels press briefing, Marcin Bodio, the present CEO of CEEP, had significantly pointed out that there were no export restrictions on US coal coming to Europe from the EU side, and that he was hopeful that would soon be no restrictions for gas and crude oi export to Europe from the American administration. He added that CEEP was in the process of “defining the level of interest among companies this autumn”, regarding energy imports from the US.
At another meeting in Washington, in 2015, hosted by the Energy Allies Association, Paweł Olechnowicz, had stressed that US exports of crude oil and LNG would diversify and strengthen European domestic markets, as well as increase the efficiency of numerous industries, such as the refining and chemical industries.
We at CEEP, feel that we were heavily involved in efforts to spur US oil and LNG exports, and strongly conveyed our message to the US authorities, regarding the value to Europe of such exports, ‘loud and clear’, and that we were undoubtedly listened to. The news of the lifting of the crude oil ban, and the commencement of LNG exports, has indeed been a good start to 2016 for CEEP, and we will strive for further success, in relation to this major boost for European energy security.