By Syed Rashid Husain
THE arrival of Donald Trump on the global political theater is beginning to impact the energy world - and in more than one ways.
When Trump nominated climate change skeptic Oklahoma Attorney General Scott Pruitt to run the US Environmental Protection Agency, he also signaled his intentions of supporting fossil fuel industry to the hilt, undoing in the process President Obama’s effort to fight climate change.
All along his campaign, the president-elect has been calling climate change a hoax, perpetrated by the Chinese, pledging to scrap the global climate treaty the United States signed last year in Paris with 195 other nations. That treaty commits the US to work to limit the rise in temperatures from human-induced warming to no more than 2 degrees Celsius.
With the nomination of Pruitt as the next EPA head, this phase seems over. All these years Pruitt has been in lead in resisting Obama’s environmental agenda. He has been a known architect of the multi-state legal effort to block the administration’s sweeping national mandates for cleaner-burning power plants, a linchpin of the program to combat global warming.
Pruitt has sued the EPA, the agency he is now set to lead, multiple times over what he considered ‘the unwarranted meddling’ by the federal government. He has targeted regulations that limit air pollution haze in national parks, methane leaks from drilling, and mercury and arsenic seeping from power plants.
Like Trump, Pruitt too disputes that human activity is warming the planet at an alarming rate and that world governments must act aggressively to limit emissions if they are to avoid catastrophic consequences. He co-wrote an article last May for National Review with Alabama Atty. Gen. Luther Strange insisting that the climate debate is “far from settled.” The two argued: “Scientists continue to disagree about the degree and extent of global warming and its connection to the actions of mankind.”
As EPA head, indeed Pruitt would not be empowered to cancel the Obama Clean Power Plan. But he could definitely decline to defend the plan in court or attempt to slow its implementation. The emissions rules are unlikely to be effective if enforced by an EPA chief who opposes them.
Major environmental groups and Democrats responded to Trump’s pick of Pruitt with alarm. “Pruitt could be the most hostile EPA administrator toward clean air and safe drinking water in history,” Ken Cook, president of the Environmental Working Group said.
“For the sake of the air we breathe, the water we drink and the planet we will leave our children, the head of the EPA cannot be a stenographer for the lobbyists of polluters and Big Oil,” said House Democratic leader Nancy Pelosi. “Pruitt has brazenly used his office as a vehicle for the agenda of big polluters and climate deniers in the courts – and he could do immense damage as the administrator of the EPA.”
Pelosi’s comments referred to a 2014 New York Times report that found energy lobbyists drafted letters for Pruitt to send to federal agencies and Obama, outlining the hardships of federal regulations. Several opponents cited the letters in charging that Pruitt is unqualified for the EPA post.
Trump’s entry into the political stage has also pushed Iran into a hurry. On the campaign trail, Trump has been calling the nuclear deal with Iran as “catastrophic”, asserting to renegotiate it. In a speech before the American Israel Public Affairs Committee (AIPAC), he said: «My number one priority is to dismantle the disastrous deal with Iran.»
Iran is aware of the impending threat. Last Monday, the Iranian Foreign Minister Mohammad Javad Zarif reminded while in Beijing that each of the seven world powers involved in the agreement “has the obligation to fully implement it.”
But besides taking the public posture that Washington cannot undo the deal, Tehran is also hurrying into action, making it still more difficult - if not impossible - for Trump to implement his plans, intensifying the push to sign deals with oil majors.
Last Wednesday, Royal Dutch Shell PLC signed the ‘Memorandum of Understanding’ with Iran to evaluate the Azadegan and Yadavaran oilfields near the Iraqi border, and the Kish gas deposit in the Gulf. Iran hopes that Shell will invest in the fields to boost recovery rates. The two oil fields involved in the deal are estimated to have about 8.2 billion barrels’ worth of recoverable oil.
Undeterred by Trump presidency, the MoU marks the first entry of Shell in Iran in the post-sanctions era. Speaking to reporters in Vienna, Arnaud Breuillac, Total’s head of exploration and production, said he was “not particularly” worried about a Trump administration impeding his company’s Iran plans. The deal is just a MoU - yet. But if the two parties do end up working out, it could be a real spanner in Trump programs.
Early November, while Trump was busy celebrating his victory, Iran also signed a preliminary $4.8 billion gas agreement with the French company Total.
The agreement, to be finalized next year, is for new development at the vast South Pars gas field. It aims to produce 1.8 billion cubic feet of gas per day for both domestic consumption and exports. As per the agreement, Total is on track to get a 50.1% stake, while the China National Petroleum Corporation would have 30%. The three-year project includes 30 wells, two offshore platforms and two pipelines spanning 85 miles. The South Pars field is estimated to contain 14,000 billion cubic meters of gas, or about 8 percent of the known global reserves. Total is reportedly also in talks with Tehran about developing Iranian oilfields.
The French oil major is no stranger to Iran. It had its eye on the prized South Pars field, which Iran shares with Qatar, since 2004. It and China›s CNPC had signed development deals with Iran then. But international sanctions forced them to pull out in 2009.
And much like Shell, Total too doesn’t seem too concerned with Trump presidency. The election of Donald Trump will not have an impact on the investments of Total in Iran, the firm’s head of gas, renewables, and power Philippe Sauquet told reporters on Nov. 9. “We have always said that we are interested in returning to Iran on condition that the investments that are proposed to us are sufficiently attractive and knowing that for us, it was out of the question to do anything that would contravene international rules,” Sauquet told reporters. “The election that took place in the United States does not change anything,” he added.
The global energy chessboard is spread out. Moves and counter moves are being made. What shape things take over the next few months would be interesting and indeed keenly monitored.
