00:00I want to start in Qatar because these attacks on the South Par's gas field have knocked out 17%
00:07of Qatar's LNG.
00:08And that's, I mean, that's huge for Doha. It's going to be a loss of about $20 billion in revenue.
00:12And both folks I've spoken to on the ground and reporting says it's going to take years to repair.
00:18What does this mean long term for the viability of LNG from that country or even the region?
00:24Yeah, Ras Lofan is the biggest LNG export project in the world, and Qatar is the second largest exporter in
00:29the world.
00:29And so this will have a major impact.
00:31It's a reminder how concerning the recent escalation and attacks on energy assets in the area are.
00:37That's one of the reasons why the industry was really welcoming the president's statement yesterday that going forward,
00:43these are not going to be the focus of attacks and that both sides really need to de-escalate when
00:48it comes to the energy assets specifically,
00:50because they are so critical not just to the region, but to the world.
00:53Want to get a sense of what this disruption is like and how long it might take to repair that
00:57facility?
00:58And when you look at the whole natural gas apparatus here around the world and what's been hit,
01:02what's your sense of timing and timetable right now for getting things back up and running the way that they
01:06were?
01:06Yeah, look, I mean, these disruptions are always a function of the scale and the duration.
01:11I think we have a sense of the scale.
01:13We know how much product, how much crude, how much LNG runs through the straits, but no one really knows
01:18the duration.
01:19It's clear that the market and the industry and the administration are focused on opening the straits as quickly as
01:25possible
01:26to really limit the damage that it does to markets.
01:29But one of the reasons why those attacks on the energy assets are so concerning,
01:32because when it does come to a resolution and the straits are reopened,
01:37that could add to the time that's required to bring those products back onto the market.
01:42And so that's why it's so important to dial down those attacks and make sure that those are avoided.
01:47But I want to ask you, I mean, Iran has been threatening to do this for years,
01:51shut down the strait, if action were taken against them.
01:54Why wasn't this something the industry as a whole was better prepared for,
01:57or is it just that there simply isn't another option?
02:01Well, I mean, I do think that there's a lot that has been done to diversify supplies around the world,
02:06including from the United States.
02:07You know, I mentioned that Qatar is the world's second largest LNG exporter.
02:10Well, the world's largest LNG exporter is the United States.
02:13We're the world's largest producer of natural gas,
02:16the largest producer of crude oil.
02:18And that does bring a lot more stability to markets than what otherwise would be the case.
02:22If you can imagine such a crisis breaking out generations ago,
02:26when we were a major importer of both crude oil and natural gas,
02:29it would be a very different situation.
02:31And so that's been a big part of the strategy is to diversify supplies.
02:35But there's no way getting around the fact that the Straits of Hormuz and the Persian Gulf
02:39continues to be a critical choke point.
02:42A.P., I met with the White House in the last few days, talked about the situation and what could
02:47change.
02:47What are some of the actual items that you're pushing for that you hope the administration does
02:51to make passage safer in this critical waterway?
02:54Yeah, we welcome to have the conversation with the vice president,
02:57as well as Secretaries Burgum and Secretaries Wright.
02:59You know, I think there's a lot of alignment in terms of understanding the importance
03:02of opening the Straits of Hormuz as quickly as possible.
03:05The administration does have a few levers that they can pull on,
03:09and they've wisely started to pull on those, you know, drawing down the SPR,
03:13doing some Jones Act waivers, adding some liquidity in other ways to the marketplace.
03:18That adds more flexibility.
03:19Those are steps in the right direction.
03:21But I think everybody understands that for a disruption of this magnitude,
03:24there really is only one solution, which is reopening the Straits.
03:28That was the message from the industry.
03:30That's exactly what the administration is focused on as well.
03:33There's a couple of U.S. naval ships that just left California about two days ago,
03:38and they're heading to the region, likely to help with potential escorts.
03:43I want to ask you, first, are military escorts really a solution to this issue?
03:48And even if they are, those ships, it's going to take them quite a while to get there.
03:53What is the plan in the meantime?
03:54Yeah, I mean, I can't speak to those ships specifically,
03:57but I do know that the safety of the crews, of the workers in the region,
04:01is the industry's number one priority.
04:03And so, you know, it is necessary to make sure that the shipping vessels have the insurance requirements,
04:09and the administration was smart to provide some insurance guarantees on that front.
04:14But it's clear that there is still a threat to the physical safety of the vessels
04:18and of the crews who operate them,
04:20and you're unlikely to see movement in additional transits
04:24until those security concerns can be alleviated.
04:27And so I think that that inevitably is the next step, is finding a way to do that.
04:32How exactly that works, of course, we would be very deferential to the administration on,
04:37but that's what's needed, clearly, in order to open the straits.
04:40Dustin, let's talk gas prices.
04:41I think a lot of people are worried about that,
04:43and the way that the president talks about it is it's very much a short-term escalation in price.
04:47Prices are up. They're going to come down.
04:49He says that's going to happen fairly quickly.
04:52What is your read on, A, how much higher they have to go here,
04:55and, B, how much longer that's likely to last for consumers?
04:58Well, I mean, you can already start to feel the impact,
05:01and that's not a surprise given what's happened, especially to crude oil prices.
05:05But as I said, it really is a function of the scale times the duration,
05:08and the duration is the big unanswered question right now.
05:11I will say that as we continue to navigate this,
05:15it is very important that we have so much U.S. supply out there.
05:18That meant that global markets were fairly well-supplied going into this dynamic,
05:24and so that does provide a little bit of buffer and perhaps gives there a little bit more time.
05:29But the direction of travel here is very clear.
05:32We're going to have to open that straight,
05:33and markets are going to be volatile until there's a clear signal or a clear pathway for doing that.
05:39What else would you like to see from the U.S. government?
05:43You know, they've been really responsive in terms of understanding the safety concerns of the industry.
05:48As I said, it makes a lot of sense what they're doing in terms of drawing down the SPR
05:52and coordinating that with our global partners.
05:55That really maximizes the impact because these are global markets that are fully integrated.
06:01And so they've been smart to pull on those levers,
06:04and now they're altogether reasonable in keeping their main focus on reopening the straits as quickly as possible.
06:11Dustin, is this crisis reframing at all the conversation about renewable energy?
06:15This is an administration that wasn't really prioritizing it,
06:18but at a moment where we see the difficulty of getting inexpensive oil and gas,
06:22does it kind of elevate that conversation once again or change the way that we should be having it?
06:26Well, I do think it's an important reminder of how necessary it is to control your own energy destiny.
06:32And the reality is that the United States has done a really nice job of that over the last 20
06:36years,
06:37as we've converted from being one of the world's largest importers to a net energy exporter,
06:41the world's largest producer of oil and gas, not only does that provide more stability to global markets,
06:46but it does, to a degree, insulate the United States as well.
06:50And so making sure that we double down on energy production here in the United States,
06:55of all forms, I think is absolutely a conclusion that a lot of folks are going to take coming out
07:01of this.
07:02The diversity of supply is always going to be important,
07:05both in terms of the types of supply and the location of the supply.
07:08The United States has done a nice job of that, but this is a reminder of how necessary that is.
Comments