Daily GPI / Regulatory / Regulatory / NGI All News Access

Commerce Outlines Procedure For Oil, Gas Industry to Request Tariff Exemptions

After garnering feedback from many circles, including the oil and natural gas industry, the Trump administration outlined a procedure for requesting an exemption to its recently announced tariffs on steel and aluminum imports, and began accepting such requests on Monday.

On Sunday, the Department of Commerce said U.S. "individuals or organizations" could apply for an exemption from the steel and aluminum tariffs, which were enacted earlier this month, through its Bureau of Industry and Security. The procedure calls for Commerce Secretary Wilbur Ross to consult "with other administration officials" in evaluating the exemption requests, with a focus on "national security considerations." Commerce said it would process requests within 90 day of receiving them.

notice outlining the procedure to request an exemption was published as an interim final rule in the Federal Register on Monday.

At issue are specialty steel products, which are used in oil and gas pipelines and at liquefied natural gas export facilities. The oil and gas industry and its allies argue that such products meet the criteria for an exemption from the 25% tariff on steel imports because there is an insufficient supply of comparable products from domestic steel manufacturers.

Jack Gerard, CEO of the American Petroleum Institute, said it was important for Commerce to provide clarity and flexibility to the oil and gas industry during the exemption process. Gerard and several Big Oil executives met with Trump and Vice President Pence at the White House last Thursday to discuss the exemptions, among other things.

"We expect the [Commerce] Department will acknowledge various market realities and take into consideration the complex supply chains of the U.S. oil and natural gas industry and the need for specialty steel not available domestically for many of its projects," Gerard said.

The steel tariff, plus a 10% tariff on aluminum imports, is scheduled to take effect on Friday. Canada and Mexico are excluded from the tariffs, at least for now. Most of the steel imported into the United States is from Canada.

In a note to clients Monday, analysts with ClearView Energy Partners LLC said "at first blush, we regard it as a mixed bag for energy producers -- and other importers.

"On one hand, the exclusion process appears to be limited, narrow and contestable -- which could be bad news. On the other hand, the exclusion process does not appear to reallocate tariffs from exempt countries and excluded products to other imports -- which could be both good and bad news."

ClearView estimated -- based on data from the U.S. International Trade Commission and the U.S. Census Bureau --- that exemptions for Canadian and Mexican steel imports would have sheltered about 0.9 million metric tons (mmt) of steel imported during the 2017 calendar year (CY), or about 17.8% of U.S. pipeline steel imports.

The ClearView analysts added that should South Korea also be granted an exemption later this week, the above figure would rise to about 2.6 million mmt, or about 51% of U.S. pipeline steel imports from 2017.

"[That] would still leave U.S. oil and gas producers to pursue exclusions for products that accounted for about 2.5 million mmt, about 49% of CY2017 U.S. pipeline steel imports," ClearView said.

Recent Articles by Charlie Passut

Comments powered by Disqus