The Energy Market Oracle from Dallas: 'The US strategic goal is to block russia's liquefied natural gas exports'
Anas Alhaji on the ‘second advent of Trump’ in the US energy sector, the expiry date of political promises and the American sanctions efforts amid the war in Ukraine
On 20 January, US President-elect Donald Trump is to officially take office. As he prepares for his inauguration, he repeatedly draws attention to himself with unexpected and provocative statements, behaving like a genuine showman.
For instance, last year, the American leader promised to end the war in Ukraine ‘within 24 hours’ after returning to the White House. He also used the slogan ‘Drill, baby, drill’ to convey to the ‘great American people’ a promise to increase oil and gas production for a ‘massive price cut’ that ‘no one has ever seen before’.
As he approaches the official office, Trump is changing his perception of reality. On 7 January, he said that the russian-Ukrainian war had turned out to be ‘much more complicated’ than expected, so he plans to end it not ‘within 24 hours’ but ‘in less than six months’.
There is also no reason to hope for a strong increase in US oil production and exports to cause a collapse in world market prices, which could leave moscow cash-strapped for the war in Ukraine.
So says Mind's interlocutor Anas Alhaji, a well-known American businessman, researcher, and energy economics expert, who is the managing partner of Energy Outlook Advisors (Dallas, USA). Prior to that, he served as Chief Economist at NGP Energy Capital Management, a leading North American investment fund (entered the market in 1988 as Natural Gas Partners).
Anas Alhaji's forecasts on energy prices, geopolitical risks and the OPEC+ strategy are highly accurate, earning him the nickname ‘The Oracle of Energy Markets’.
In an interview with Mind, he spoke about the peculiarities of large business in the US shale and LNG industry, which enabled Venture Global to become a leader in the export of US liquefied natural gas, and how russian aggression against Ukraine contributes to US global interests in the gas market.
Furthermore, Dr Alhaji outlined the key events and trends in energy geopolitics that merit special attention in 2025.
– What is currently happening in the US oil and gas industry? What changes do you expect after Donald Trump’s inauguration?
– US crude oil and natural gas production is at a record high. US LNG production and exports are at a record high.
There are all prerequisites that the American LNG production and exports will continue to increase globally. It has already become an integral part of US foreign policy.
– There are expectations in certain circles that Trump's return to the White House would further boost US oil production and exports, which would trigger a significant drop in oil prices on the world market, if not a collapse. As a result, russian federal budget revenues would drop so much that putin would run out of money for the war in Ukraine. How do you estimate these prospects?
President Trump cannot increase oil production significantly as he did during his first term for the following reasons:
First, interest rates are much higher now.
Second, the US petroleum industry started from a crash in 2015 when US production declined by about 1 mb/d.
Third, the shale industry is now dominated by the oil majors.
During Trump’s first term, many small and medium oil companies took advantage of low interest rates and the availability of capital to drill, increase proven reserves, and increase production so they could sell their companies to larger actors.
In other words, the time horizon of small and medium oil companies is shorter than the time horizon of the oil majors. Small but powerful players, how
The fourth reason for the slowdown in the oil industry is the lack of funding. Many of the investment funds have lost interest in the industry today. Changes in their priorities are either due to projects' low returns or because they have divested from oil and gas to meet their climate goals.
The fifth reason is related to the peculiarities of the attitude of oil majors to business scaling. Their real interest in concentrating shale assets is more about control of US oil production and exports than about making money from shale. We have seen this behaviour from the oil majors in the past. However, the oil majors will never admit this fact publicly.
And finally, the sixth reason I want to mention in answering your question.
As US shale production broke record after record in 2024, the amount of investment needed to keep production flat has also hit a record high. Oil companies have to use most of the new investment to replace declines in production, as the amount of funds required for such replacements has increased as production got higher.
– Can American LNG’s “molecules of liberty” completely replace russian gas in Europe and Asian markets?
– No. But the US LNG has replaced a large share of russian gas anyway. The US LNG exports are expected to increase significantly in the next 7 years.
The US strategic objective is to prevent russia for expanding its LNG capabilities. Washington’s sanctions on Arctic LNG 2 (the russian Novatek's flagship project – Mind) are a part of this strategy and have nothing to do with invasion of Ukraine.
– Аmong American LNG market players, a special place has been occupied by Venture Global lately. The Plaquemines plant, which it put into operation by late December 2024, has not only turned it into the largest LNG exporter in the United States, but also strengthened America's leadership in the global gas market. What is driving Venture Global’s success?
– In addition to its global vision and the conviction that the US has massive reserves of cheap natural gas, the company's approach to large LNG projects is innovative: more efficient and faster than the conventional approach. It is based on vision and knowledge of the business.
– What can you tell us about VG’s business and its prospects?
– I am bullish on LNG in general and on Venture Global in particular.
– Will climate ambitions and the green agenda do any harm?
– For the third year in a row, we see a retreat from climate goals, by governments, companies, and financial institutions.
Climate goals were extremely ambitious and did not fit with economic and political realities.
– russia's full-scale war against Ukraine has been in its third year. How has russian aggression impacted the global energy market? Who are major winners and losers?
– The invasion and the sanctions that follow changed the global direction of trade in energy: Oil, gas, LNG, coal, and electricity.
The main winner is the US. The primary loser is Europe. Russia continues to export its oil, gas, LNG, and coal, although to different markets and at a discount.
Regardless, Europe was the primary loser: the energy crisis has not only lead to massive increase in energy expenditures for consumers, but also contributed to recessions and low economic growth in the region.
– Looking back at the year 2024, what were the most important events and trends in energy geopolitics?
– The most important event in the oil market in 2024 was the success of OPEC+ in achieving its three goals: market stability, low price volatility, and preventing market collapse.
The most important event in energy markets writ large is the re-election of President Trump: major change is expected in domestic and international markets. This, in particular, drove a revamp of the International Energy Agency.
– And what events and trends do you recommend to watch in 2025 for the best understanding of the market?
– First and foremost, the Russia-Ukraine war. China's economic growth is also worthy of close attention. Also, we need to watch Donald Trump's efforts to dismantle the Inflation Reduction Act (which created financial incentives for the Joe Biden administration to increase investment in green energy and decarbonisation – Mind). And finally, the impact of overhaluing the international Energy Agency.
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