U.S. Rejects Tariff Exemption for Steel in Oil Wells

SEATTLE (Scrap Monster): President Donald Trump's administration shot down its first request from an importer of oil and gas equipment to waive a 25pc tariff on steel imports, as rising trade fights become a worry for the oil and gas sector.

Borusan Mannesmann Pipe US sought the tariff exclusion for 135,000 t/yr of "green" steel tubing and casing it imports from Turkey and finishes at its facility in Baytown, Texas. The company argued waiving duties would "enhance national security" by allowing it to increase domestic production of steel products in high demand by the energy sector.

The administration, in decisions the US Commerce Department issued yesterday, denied the company's waiver requests. Commerce said the imported products are manufactured in high enough volumes in the US and there were "no overriding national security concerns" to justify providing tariff exclusions. Borusan did not respond for comment.

The waiver denials come amid concerns from oil and gas companies about trade fights. The US today put into effect tariffs on $34bn of Chinese imports, causing China to immediately retaliate with its own equivalent tariffs on US goods.

Trump yesterday threatened to impose tariffs on another $16bn in Chinese imports in two weeks and said he had tariffs for another $450bn of imports in waiting. China's next tranche of tariffs would include a 25pc tariff on energy and chemical imports.

Borusan's waiver request covered just 4pc of the 3.1mn metric tons of oil country tubular goods the US imported last year, according to US Census data. But the request has been closely watched for hints about how the administration might respond to tariff waiver requests from oil and gas companies that similarly cite national security.

Shell's offshore division has cited national security in requests to waive tariffs on 18,900 t/y of tubing and casing it says are unavailable from US manufacturers. Delaying and raising the cost of oil and gas extraction "does not serve the national security," the company said in its requests for exemptions.

US independents Hess and Marathon Oil made similar arguments in requests to waive tariffs on 3,700 t/y and 5,000 t/yr, respectively, of steel. Hess said tariffs were detrimental to the "financial viability of exploration and production activities that bolster national security." Chevron cited national security in its request for exemptions on 460 t/yr of steel.

Oil and gas companies have said the specialty steel products they need are not available in the US. BP took this approach when requesting to waive tariffs on 14,000 t/y or pipes, tubes and other products that will primarily be used in its 140,000 b/d Mad Dog 2 project in the US Gulf of Mexico.

Courtesy: www.argusmedia.com