11 April 2014, News Wires – The US could give Europe and Ukraine relief from energy dependence on Russia within months if it overturned the 40-year ban on most crude exports, according to the head of Hess.
“There’s something we can do today to help our allies now, and that’s give the green light to crude exports,” Reuters quoted chief executive John Hess as saying at the Center for Strategic & International Studies, a Washington-based think tank.
He estimated that Europe and Ukraine could get relief from volatile oil prices in 90 days if the ban was overturned.
Concern about Europe’s dependence on Russian energy has risen after President Vladimir Putin’s government annexed the Crimean peninsula.
Europe gets 30% of its crude supply from Russia, and has been hesitant to impose sanctions on Moscow for the invasion of Ukraine. In addition, Russia has hiked prices for natural gas it sells to Ukraine, Reuters reported.
US exports of natural gas could also help diversify energy supplies in Europe, but not substantially for about four years as billions of dollars worth of infrastructure needs to be built before shipments can start.
As one of the largest drillers in North Dakota’s Bakken region, Hess could benefit from a lifting of the ban on crude exports, which the federal government implemented after the Arab oil embargo in the early 1970s. Hess is spending about half of its $5.8 billion energy exploration and production budget this year on drilling shale resources, mostly in the Bakken.
Pressure is growing on the Obama administration to overturn the ban, but analysts say there is little chance he will do so in a midterm election year. There is no major legislation to reverse the ban, as lawmakers are hesitant to support a measure that could later be blamed for raising motor fuel prices.
Hess played down the notion that reversing the ban could raise gasoline prices, saying that prices are set on global futures markets and that the US already exports millions of barrels per day of oil products.
Zbigniew Brzezinski, who was national security adviser to former President Jimmy Carter, said sending US crude to Europe could be a “good and practical” idea to diversify its energy supply from Russia, Reuters reported.
But he cautioned against the idea, popular among many US politicians, that surplus oil and gas from the US energy boom could be used as tool to address wide geopolitical issues.
“I’m not sure how transformative it’s going to be, I think there’s enormous potential, but … there are still considerable areas of uncertainty,” Brzezinski said.
Strife in the Middle East and rapid developments in cyber warfare are two issues that could overshadow the US energy revolution, he said.