Another rift has opened between the U.S. oil and gas industry and President Trump over new regulations aimed at promoting domestic shipbuilding and countering China's maritime dominance.
This month, the Trump administration introduced rules mandating that at least 1 percent of natural gas exported from the United States must be transported on U.S.-built tankers by 2029. The U.S. currently leads the world in liquefied natural gas (LNG) exports but does not produce the specialized vessels needed for these shipments.
In a letter sent to the administration last week, the American Petroleum Institute (API), the primary trade association for the U.S. oil and gas sector, stated that the industry would be unable to meet this new requirement and urged reconsideration of the rules.
The API expressed concerns that the regulation “risks counteracting the significant progress the Trump administration has made toward reducing uncertainty and unleashing U.S. LNG,” addressing the letter to Energy Secretary Chris Wright and Interior Secretary Doug Burgum.
The maritime regulations have emerged as a point of contention between oil and gas executives—many of whom supported Trump's campaign—and the administration. While the industry shares Trump's goal of increasing LNG exports, it generally prefers more open trade arrangements, contrasting with the administration's protectionist stance. This tension has contributed to decreased economic confidence, reflected in falling oil prices.
Currently, oil prices are around $62 per barrel in the U.S., down from $78 prior to Trump's presidency. Although natural gas prices have also declined, they remain higher than a year ago.
Transportation Secretary Sean Duffy indicated on Monday that there may be room for negotiation regarding the shipping rules. “We should hear what oil and gas has as their concerns, listen to them, but find a pathway forward where we can build ships in America to send great American energy around the world,” he stated during a visit to the Hanwha Philly Shipyard in Philadelphia.
The Philadelphia shipyard was acquired last year by Hanwha Systems and Hanwha Ocean, both South Korean companies, which plan to modernize it. Hanwha Ocean has delivered 200 LNG carriers from its South Korean facilities, which dominate the construction of such vessels along with Japan and China.
J. Elizabeth Peace, a spokeswoman for the Interior Department, declined to comment on the API's letter, which was previously reported by other sources.
Despite the disagreement over the new rules, the API has acknowledged other positive actions taken by the Trump administration, particularly those that facilitate increased LNG exports. “On balance, we have made significant progress toward ensuring that we have long-term American energy dominance going forward,” said Amanda Eversole, the group's chief advocacy officer.
In addition to the requirement for U.S.-built LNG ships, the new rules also impose fees on vessels owned and built by Chinese companies. These regulations stemmed from a petition submitted during the Biden administration, requesting a federal investigation into Chinese shipbuilding practices, which was found to involve unfair subsidies.
The Office of the United States Trade Representative, responsible for the new regulations, revised an earlier proposal following widespread pushback from various industries and trade groups, including the API. However, the API contended that the updated requirement of 1 percent of LNG exports to be carried on U.S.-built vessels by 2029, escalating to 15 percent by 2047, remains excessively demanding.
The industry association estimated that five U.S.-built LNG tankers would be needed by 2029 and cited concerns about shipyard capacity and skilled labor as factors making this target “not feasible.” Nevertheless, the rules do allow companies to delay compliance with U.S.-built LNG transporters for three years if they have placed an order for and taken delivery of a U.S.-built vessel within that timeframe.