WASHINGTON – April 21, 2020 – On behalf of US independent producers of oil and gas, the American Exploration and Production Council sent a letter to the White House today to bring their attention to concerns with regard to China’s commitments under the Phase One trade agreement with the United States.
“As crude oil prices continue to fall because of depressed demand from COVID-19, every measure possible must be taken to protect American jobs and alleviate crude oversupply and diminishing storage capacity issues independent producers are facing – especially holding China to their US trade obligations,” said AXPC CEO Anne Bradbury.
The letter, addressed to Ambassador Lighthizer, explains that the Phase One trade agreement between the United States and China has the potential to significantly increase domestic oil and gas producers’ access to foreign markets, while alleviating the devastating conditions the industry is facing due to global demand destruction and oversupply. In addition to underscoring that both our country’s energy independence and national security are now at severe risk due to the negative demands impacts, market oversupply, and the lack of storage capacity, the letter also says:
Full implementation of the US-China Phase One trade agreement could bring some relief to supply and storage issues, but only if China meets its trade obligations. As you know, China agreed to purchase nearly $60 billion of “US energy” over the next two years. Early data shows China has only purchased a de minimis amount of US crude in the first months of 2020, while it has increased purchases of crude oil from Saudi Arabia and Russia.
China’s implementation of the trade agreement is also critical because China has the most storage flexibility with its national petroleum reserves. It has been reported that Chinese government agencies and state-owned energy companies have been looking at bolstering their strategic available stockpiles with “cheap oil.” Currently, these Chinese stockpiles are being filled primarily with Russian and Saudi crude.
Rather than increasing imports from countries like Russia and Saudi Arabia, the Chinese government must take the necessary steps to remain in good standing with the US as a trusted trade partner.
The oil and gas industry supports millions of American jobs. Data from IHS Markit shows that U.S. independents combine to produce about 83 percent of all U.S. production.
About the American Exploration and Production Council:
AXPC is a national trade association representing 25 of the largest independent oil and natural gas exploration and production companies in the United States. Dedicated to safety, science and technological advancement, AXPC members strive to deliver affordable, reliable energy to consumers while positively impacting the economy and the communities in which we live and operate. Learn more at https://www.axpc.org/