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News // Middle East and OPEC

Trump's America energy 1st plan greeted politely by OPEC and Russia

25 January 2017 , 12:11Neftegaz.RU1083

Less than a day into his 1st week as U.S. president and despite his current focus on free trade deals, Donald Trump has reiterated his vow to make America energy independent by releasing an America 1st Energy Plan whose highlights include taking advantage of the country's «estimated $50 trillion in untapped shale, oil, and natural gas reserves.»


 However, while this may seem like a war cry to Middle Eastern producers whose allegiance to the OPEC output reduction agreement is tenuous and conditional, OPEC members Saudi Arabia and Venezuela – 2 of the U.S.'s biggest suppliers – are downplaying Trump's rhetoric.

In fact, Khalid Al-Falih, energy minister for the Saudis, said he is looking forward to working with the Trump administration: «The positions that the U.S. and Saudi Arabia take in global energy are very important for global economic stability.»


Al-Falih's Venezuelan counterpart, Nelson Martinez, said he doubts his country's shipment to the U.S. (about 733,000 barrels per day compared to the Saudis' 1.08 million bpd) will dwindle: «The export volumes will be maintained; there is a lot of interdependence in the world of energy, [and] it's good to maintain it for everyone's good.»

In a similar vein, Essam Al-Marzouq, oil minister for Kuwait, said he is not worried that U.S. shale is recovering due to the higher oil prices generated by the OPEC agreement - in this case «because I think this will be absorbed by an increase in demand.»


Given the faltering Saudi economy and the calamitous state of affairs in Venezuela, it could be argued that maintaining trade with the U.S. is vital, and in the spirit of at least trying to appear to be diplomatic about its agenda, the Trump administration stated it will «work with our Gulf allies to develop a positive energy relationship as part of our anti-terrorism strategy.»


The placid stance taken by Saudi Arabia and Venezuela may also be due to what Bloomberg outlines as a long series of promises by former U.S. presidents – starting with Richard Nixon – to end reliance on OPEC product;

Bloomberg notes that despite George W. Bush's 2006 promise to end his nation's «addiction» to Middle East oil, shipments from OPEC rose 10 % during his time in office.

While the Trump energy blueprint is lacking in fine detail, it hinges around two basic initiatives: eliminating «harmful and unnecessary policies such as the Climate Action Plan and the Waters of the U.S. rule,» which would reportedly increase American wages by more than $30 billion over the next 7 years; and reinvigorating the U.S.'s commitment to clean coal technology.


One outright supporter of Trump's America 1st energy plan is Russia: Alexander Novak, Russian energy minister, told CNBC,«It's very pleasant for us that energy occupies 1st place on the new administration's program.»

However, that is because Russia is hoping to rekindle relations with the U.S. that were quashed by former president Barack Obama.

«It would make sense to resume the dialogue we enjoyed before 2014» Novak said.


Despite considerable skepticism about Trump's energy initiatives and the hurdles he faces in achieving them, big oil views his rise to the presidency as a major win for a sector bogged down by regulations and protocol: Allan Jeffers, spokesman for Exxon Mobile Corp., said, «We intend to work constructively with the president and his administration.»


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