Biden Suspends US Federal Oil, Gas Leases
US president Joe Biden has imposed a moratorium on the issue of leases for oil and gas development on public lands, following through on a promise he made on the campaign trail.
In an executive order titled Tackling the Climate Crisis at Home and Abroad, announced on January 28, Biden said his administration would "pause new oil and natural gas leases on pubic lands or in offshore waters." The moratorium will remain until there has been a review of permitting policy, taking into account the impact of oil and gas activity on the climate, the White House said.
Biden was repeatedly accused by former president Donald Trump of wanting to enforce a nationwide ban on hydraulic fracturing in the run-up to the November presidential election. Biden's suspension instead only affects oil and gas operations on federal land or offshore, and will have no impact on existing permits. But it will still have significant ramifications for future US oil and gas production.
As Edinburgh-based Wood Mackenzie noted in November, "onshore, the impact would be minimal. Offshore, the effects would be more significant, although they would take some time to become apparent. A ban on new leasing, if permanent, would mean that by 2035 US offshore oil and gas production would be about 30% lower than if lease sales had continued."
Biden has also taken aim at US funding for international hydrocarbon projects. In his order, he called on the secretaries for state, the treasury and energy to work with the US Export-Import Bank (Exim) and the US International Development Finance Corp and other agencies to determine ways the US "can promote ending international financing of carbon-intensive fossil fuel energy while simultaneously advancing sustainable development and a green recovery."
Carbon-intensive fossil fuel energy is a likely reference to coal, and Biden has not made his position clear on international oil and gas financing. In one of its largest recent deals, Exim cleared a $4.7bn loan in September 2019 to support the Total-operated Mozambique LNG project, which at the time was led by Texan producer Occidental Petroleum.
The UK similarly announced it would end direct government support for oil, gas and coal investments overseas in December. Likewise, France pledged in November to phase out state export guarantees to upstream projects, beginning with those for the dirtiest forms of oil this year and ending with those for gas in 2035.
Having banned fracking at home, Paris was also said to be behind Engie's decision to halt negotiations on LNG purchases from NextDecade's Rio Grande LNG project which is still awaiting final investment decision. The French state owns a minority stake in Engie.