US can’t save EU from energy crisis – FT
The US is not able to ease the EU’s energy crunch by increasing its shipments of oil and gas, the Financial Times reported on Wednesday, citing shale industry executives.
“It’s not like the US can pump a bunch more. Our production is what it is. There’s no bailout coming, not on the oil side, not on the gas side,” Wil VanLoh, the head of private equity group Quantum Energy Partners, one of the largest shale industry investors, told the news outlet.
Europe is grappling with a growing energy shortage, trying to secure new sources of supplies while moving away from Russian energy. Analysts fear that the upcoming EU embargo on Russian oil will send prices to new record highs. According to the International Energy Agency, oil sales from Russia could fall by almost 20% when the EU embargo takes full effect, which is a vast amount for the global market to lose with Russia being one of the world’s largest petroleum exporters. Over the past several months, Europe has increased purchases of oil and liquefied natural gas (LNG) from the US, but according to shale industry executives, there is not much more they can do.
“We’re not adding [drilling] rigs and I don’t see anyone else adding rigs,” Scott Sheffield, the CEO of Pioneer Natural Resources, one of the biggest oil producers in the US, told FT. According to the report, the overall number of operating oil rigs in the US has not grown in weeks, while the productivity of those in operation has dropped.
Moreover, despite recent calls from Washington for the shale industry to hike production to lower prices at the pump at home, experts say that investors are unlikely to allow it.
“Investors generally don’t want shale companies to pursue a growth model… The capital availability is extremely limited,” Ben Dell, the chief executive of private equity group Kimmeridge Energy, was cited as saying. In other words, there is no way to be sure that prices will stay high long enough to make up for the cost of drilling new wells.
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