Tariffs, trade wars and “drill, baby, drill”

Oil and gas prices plummeted in the immediate aftermath of the trade war between the US and China.

With many expecting oil and gas prices to continue to decline as a result of Trump's tariffs, the trade war raises raises fundamental questions about the profitability of oil production. Will oil producers feel inspired to "drill baby drill", as Trump famously promised, if prices continue to fall?

In this episode, Richard speaks to Saul Kavonic, Head of Energy Research at MST Marquee, about the impact on global trade flows, prices and why an expected boost in LNG in 2026 may not materialise.

Host: Richard Sverrisson - Editor-in-Chief, Montel News
Contributor: Laurence Walker - Deputy Editor-in-Chief, Montel News
Guest: Saul Kavonic - Head of Energy Research, MST Marquee

Editor: Oscar Birk
Producer: Sarah Knowles 

Transcript

Richard Sverrisson - Editor-in-Chief, Montel News: 0:07

Hello listeners, and welcome to Plugged In - the energy news podcast from Montel, where we bring you the latest news issues and changes happening in the energy sector. Last week, we saw the introduction of US tariffs, then withdraws negotiations, and swift retaliation from China. And now we're onto the next chapter of President Trump's tariff news story. As we have seen what many have described. As the brutal volatility that the trade wars are having on gas and oil prices. I'm going to be speaking to the head of energy research at Financial Services firm, MST Marquee shortly. But first I'm joined by our deputy editor-in-chief from London. So hi Laurence. Welcome back on the podcast.

Laurence Walker - Deputy Editor-in-Chief, Montel News: 0:49

Hi Richard.

Richard Sverrisson - Editor-in-Chief, Montel News: 0:50

I'm interested to, to get your views basically on how you describe the current sentiment in the gas market following the series of announcements, from the Trump administration, you know, the clear tariff wars that are going on here. What's the current sentiment that you are gauging when you're speaking to analysts and traders out there?

Laurence Walker - Deputy Editor-in-Chief, Montel News: 1:07

I think there is, there's a lot of caution and a lot of uncertainty still. I think traders, analysts are continually waiting for new news and new information, tidbits from Trump or just through the news to see what's the implications of these tariffs are, will they be implemented to what extent and what impact will that have? Not only on trade, but on the economy and demand supply. So yes, obviously initially it was very bearish Prices fell sort by a quarter or so from Liberation Day on the 2nd of April through to, so the end of last week when we had a sort of near seven week low in gas prices. But I think there's a little bit more optimism now that the negotiations may result in some kind of deals, which at least see some better prospect for industry and therefore demand and prices.

Richard Sverrisson - Editor-in-Chief, Montel News: 2:03

So are there any positives we can take from the short term implications of these this kind of volatility or the price movements?

Laurence Walker - Deputy Editor-in-Chief, Montel News: 2:10

Positive. Yes. For gas to some extent. I mean, this is hardest to use words like positive, but obviously we have very low stock levels at the moment, and this is something which we need to deal with. We need to replenish these stocks massively over the next few months ahead of winter. We're, you know, down to some 35% of capacity compared with sort of 60 or so a year ago. So there's a lot to go. And I think coming the IEA released a report last week saying, we're gonna need something like 25% more LNG this summer to help meet this supply. What obviously this has done, the tariffs are doing, have done a push down prices. Obviously. That is perhaps temporary. What is more structural perhaps is the extent of the tariffs being levied on China and in, in response on us from China, which we could therefore see potentially, a lack of demand completely from China through us LNG. So we're gonna see more LN energy coming over here. I think there are already signs that this is happening and so yes, we may actually end up having more. And perhaps cheaper gas as a result of some of this. But as I said before, it's still a lot of uncertainty and a lot depends on what's negotiated over the coming days, the coming weeks,

Richard Sverrisson - Editor-in-Chief, Montel News: 3:26

But some silver linings maybe. Thanks very much, Laurence. Now I'm pleased to welcome back to the podcast, Saul Kavonic, head of Energy Research at MST Marquee. It's great to have you on again, Saul!

Saul Kavonic - Head of Energy Research, MST Marquee: 3:38

Great to be with you once again.

Richard Sverrisson - Editor-in-Chief, Montel News: 3:40

And so I, you know, you're in the States at the moment. What, how could you describe the sentiment at the moment, given all the background, the context of this trade war, the tariff announcements pulling back from the tariffs? What's the actual environment like at the moment in the states?

Saul Kavonic - Head of Energy Research, MST Marquee: 3:57

I was in DC last week meeting with quite a number of senior current and former White House officials and members of Congress on this, and I think, quite a time to be in DC state of flux. We've seen with. The tariff announcements and obviously the movement in those tariffs just over the course of a few days. For someone who works in financial markets, frankly, it's a, it's quite a struggle to be sitting through, some fascinating meetings, but at the same time, seeing on your phone some of the biggest mark movements we've seen in decades happening in real time. There's, a few things to unpack in, I'm obviously looking this, very much from an oil and gas lens, but I think the way industry and the financial markets are looking at this is, there seems to be a lot of juxtaposition and in the policy announcements where elements of, not just the tariff, but the overall drill, baby drill policy approach we've seen from new Trump administration on the one hand. They're saying go. But there's other signals which say stop. Right. And the oil and gas industry is trying to figure out which is the predominant driving. What we're seeing obviously with tariffs is there's implications on the demand side from a global economic perspective, but we're also seeing some very interesting dynamics where tariffs are being used essentially as secondary sanctions to restrict supply from places like Venezuela. We're seeing the. Them being used as well as part of negotiations, which is encouraging contracting activity for U-S-L-N-G. So we really need to look at both the supply demand and contracting behavior that it's driving, and then overlay what the overall deregulatory drill baby drill approach means for us Supply. US supply growth and how effective it's going to be. I mean, we can delve into a number of these things, but industry itself is both sitting back at the moment to understand how the pieces are gonna lie after all of this. And a lot of it also, I forgot to mention, looking at their supply chains with the impact on tariffs from the cost structure, which is. Important because a number of years ago we talked about,$50 being a flaw, but what flaw these days, which is very important for run pricing. And at the same time, trying to engage, particularly with, within the US government, but also governments around the world to make sure that they can be positioned better, which of course is all the more difficult when the policy environment is changing on not just a necessarily a daily, but almost a, an hourly basis at times.

Richard Sverrisson - Editor-in-Chief, Montel News: 6:43

As you said, so there's a lot to unpack, but let's start by maybe looking at how the industry's reacting. You said, is it stop? Or is it go? Or somewhere in between? What's the reaction so far?

Saul Kavonic - Head of Energy Research, MST Marquee: 6:53

Let's perhaps just start with, and I'll phrase it, the drill, baby drill approach that trump's take the US soil and gas. So this is about US energy dominance. We've seen some very strong announcements for example, from the new Energy Secretary, Chris Wright. On this front, although I've got to say, coming back from meetings across the US on this front from political leaders and also industry is, it's very hard to see what this deregulatory drill, baby drill approach actually means in practice. I've struggled to find a single policy official who can actually describe a very specific lever and what it's going to, that they're gonna pull on the regulatory front, which is gonna fix things. So I'll give you an example. Most of where we are seeing announcements or kind of intent is one on deregulation. So we can get easier to do approvals and particularly permitting, and I'll come to what that means in a second, but also opening up a federal lands and opening up a federal lands also has a budgetary benefit. US is currently going through its budget reconciliation process to enable the extension of the tax cuts, which is a huge for those who are not familiar with us, is a major deal for this year from a legislative perspective. But what's key to all of that is they need to fine budget savings in addition to match some of the spending and actually opening up re federal lands allows them to bank some of what they would be projecting as potential tax revenue that comes from development of those lands, which helps that process. But if you actually speak to industry, it's very hard for them to identify here's a, that's not being drilled, but would be drilled. But for a change of these regulations. The truth is, there's not a really lot of near term or even medium term appetite for drilling on federal ads. Even if they were made available, there's, right now a lot of the US supply growth is driven more by the corporate strategies of the bigger players at fiscal discipline and wanting to return money to shareholders rather than a regulatory constraints. So you put this together and say, actually, it doesn't look like drill baby drills really gonna work, at least in the near term. Rather, what you are seeing is with WTI prices coming down, now you're into the fifties. In the wake of global economic risks, peti exacerbated by tariffs and OPEC more rapidly unwinding its cuts. You're seeing rigs already starting to be pulled off, including some of the best permanent acreage. So this is where it comes down to, the administration might be telling the industry to drill more in a hope of bringing down prices, but the reality is prices are coming down for some other reasons that's actually causing the US industry to pull back a contract. And what we were seeing is what was, the US supply growth increasing by perhaps, half a million barrels a day or growth this year that might be flat or even declined if current trends continue. And what, so that, yeah, go ahead. But I think that, it's keeping, that's where, that's a very good example of the go and stop at the same time and the stops winning at this point.

Richard Sverrisson - Editor-in-Chief, Montel News: 10:04

Absolutely. And it, what's the case? Is it similar, you're obviously describing oil here, but is it, what's the situation for gas in the states?

Saul Kavonic - Head of Energy Research, MST Marquee: 10:12

Gas is much what I think is much more nuanced. And if I could start with what's happening outside the states, 'cause there's obviously a strong connection. So despite oil coming down LNG prices remain quite tight. And again, we're still, this is still due to the aftermath of Russia turning off its gas to Europe where we've not seen a lot of global LNG deme supply growth since then. That only really starts to tick up from later in 20, from 2026 and 2027, and there's still a lot of latent l and g demand in the world, which people miss this. When the Ukraine war happened, and a lot of suppliers restricted into Europe, and as a result, Europe sucked huge amounts of gas away from Asia causing energy poverty there in order to meet their energy security needs in Europe. What it masked is. That later growth that would be there for LNG particularly in parts of Asia, if prices were just at more affordable levels. And a really good indication of that was actually about this time last year when prices dropped around the eight to $9, just for a very brief period, we saw a massive uptick in demand from China and elsewhere. Increasing demand by, five, 10% just in the space of a few weeks. I'm talking about five to 10% on a global level, right? Yeah, what we're, so what we're seeing now is we still structurally tightening gas, LNG prices versus oil are extremely high levels. To the point that we should start to see more gas to oil switching in some markets if the capacity is actually available, which is not a, which is a sign of an very unusual and frankly, unhealthy pricing disparity between the two commodities. So that's what's happening in the near term. Now, a few other interesting factors happen here in the us. We're seeing a big ramp up in US LNG. Production, but that from the US gas market, that's seen as a demand source obviously, and it's starting to have an impact on pricing there. So we've seen, Henry Hub prices sub three for quite a number of years. That's holed up more recently, both due to some weather and other factors domestically, but also this demand growth from exports and some of the guests is struggling to keep up. And a big, feedback when you go and speak to one of the producers, particularly in Texas and Louisiana, is they're expecting like areas like the Hayesville, which is connected to one of the LG plants. This will run through a lot of its tier one acreage by the end of the decade, you then gonna go into this, into your acreage and Henry Hub might have to structurally rise from what more historically has been around $3, towards the $4, or potentially have a four handle in front of it. And that has implications for global prices.'cause remember US is the marginal source of LNG supply. And so if we start to see Henry Hub structurally move towards for rebut. At the same time, us LNG Building costs cost inflation has been massive over the last few years. We've seen, cost per ton numbers now above $1,200 a ton, whereas previously we've seen them, seven, $800 a ton. You put these two things together and the long run price, the implications for long-term l and g prices means long-term L Gs now move from the seven to$9 age to the nine to $12 age. And the market's still towards the low end of that. The market's still in the kind of around the $9 range, but you start to look at these dynamics and say, long-term gas pricing is moving structurally higher into the double digits and what used to be a four or four $5, that four might now be seven to $9 even when you have oversupply. Again, because this latest demand in Asia comes back. The market's not adjusted to this yet, but I think we need to start factoring in a world where. L and the l and g price assumptions that we've taken for granted for really the fast five to 10 years have moved on and 10 to 12 is the new seven to nine, and it comes back also with oil.$50 was seen as the floor where you saw a lot of US supply growth come off number of years ago. But within inflation 60, the new 50, I'm talking about US prices for global prices, that's 60 to 65. So if we move to a world where 65 is the new 50. For oil and 11 is the new eight for LNG. And the implications are massive for the industry itself and for global inflation and energy security.

Richard Sverrisson - Editor-in-Chief, Montel News: 14:37

But in the short term, that's all prices have dipped, have slumped. Yeah, I mean, is there a disparity here between, is there kind of disconnect between the medium long term and the very short term impact of the tariff, the trade, war issues?

Saul Kavonic - Head of Energy Research, MST Marquee: 14:50

There's always gonna be that disconnect. That's the nature of the markets. The what? What's most interesting about what we're seeing with this near term dip, and it's only happened in the last two weeks, is already we are seeing a supply response outta the us. So the fact that WTI drops below 60 and we already start to see initial signs of rigs coming off and industry staying quite clearly that they're not gonna be growing supply at these kind of price levels. Is indicative about how the long term structure has changed and you need these short term dynamics to show it. Now, given the pressures we are facing on the global macro and what Oex doing, can we see oil prices drop into the fifties or into the low fifties? The answer is of course, yes. But I think what's important to realize is it's not a sustainable price level anymore. You, we cannot actually maintain current supply levels globally. For a period of years in those, in that price range anymore because the US is still that marginal source of supply growth. But to touch on that short term, so we have, let's perhaps just rewind two months. So before the tariff wars took place where they were just an idea rather than something that was tangible and obviously a lot scarier than many envisaged the market was looking was actually quite tight through most of last year. Where arguably, in a few hundred thousand barrel a day deficit. Then we were looking this year and said, look, even if OPEC with maintained all of its cuts, we've got supply growth from outside of OPEC of one and a half to 2 million barrels. Demand growth is only one to one and a half million barrels. So net we are gonna see supply growth, outpaced demand growth by about half a million barrels at least. That's gonna start to see the market flip into from tight markets to at least a balanced market or oversupplied. Then factor in that OPEC was planning to unwind over a million barrels a day of cuts, and then you can see particularly oversupply venture in the second half of the year. So that was the outlook, and you start to see financial markets ricing that in from late last year. Then you get this sur two surprise and outlets in the course of a week. One is unprecedented high tariff rates, which is clearly gonna have a global economic impact if kept in place, even if kept in place at much lower levels. And again, perhaps an example of that is in 2019 when the tariff war under Trump, China played out, can make a pretty good case. At about half a million barrels a day of demand disappeared. Roughly speaking about 0.6% of GDP growth equates to a billion barrels a day of oil demands. And this looks to be at least twice the scale of that. So you could see demand, which was one to one and a half million barrels, could be closer to a flat line. Now this year, and then opec at the very same time, everyone's looking to OPEC to say given these de these demand headwinds in the wake of tariffs, surely you're going to slow the pace of your unwind cuts or even cut more. And instead they're rap. They're more rapidly accelerating, their cut unlocked, and you're putting this together and you that creates a more bearish, sharp look. I think the bearishness is a little bit overdone, and I'll explain to you why that is. First of all, OPEC still holds a lot of the Cartier. They're still on drill. Baby drill as we recover is not really working in the US All the supply growth and control really still is in OPEX hands. And what OPEX I think is doing here is they're saying between now and August, we actually have a seasonal uptick in CR fighting demands. And so there's actually space for them to increase this supply more rapidly without flipping the market. Into surpluses, and then let's wait and see and revisit things towards August and see how the second half plays out. Because things that could counteract this pessimistic narrative include increased sanctions on Venezuela. Increased sanction or conflict are regarding Iran, and we could touch on that a little bit. But those two things alone could, tighten the market by one and a half, 2 million barrels a day. Which all of a sudden, everything we just put out there on that pessimist is the picture is unwound. Whereas that type thing, plus it's an opportunity for OPEC to force some compliance within the group. Particularly for some of those laggards, it's a bit of a shot of cost per bow. Again, what we've seen in previous downturns was you've seen the main leaders in OPEC take advantage of some negative macro and then compound things, and it forces compliance within the group. So we're seeing a bit of. Both of that. Plus, I imagine there's some Trump pressure on OPEC to also increase supply time given the prospect of sanctions tightening and given the prospect that it's the tariffs are gonna be inflationary, this can counteract that. So quite a few things all pointing in this direction, but when you factor then in, actually the market remains tight for the next few. And the OPL comes in the second half. There's still some wild cards regarding how tariffs global economy and sanctions play out in the second half, and obviously some global conflict areas. I think it's premature to think Oex really decided to flood the market of an all-out market share war, and the fact that OPEC can see us. Producers are already on the back foot at 60 and they probably don't have to push prices below 50 to get the supply response that they were hoping to see on the US and take market share from the us And I think this view that. It's this v overly pessimistic view that the markets becoming entrenched in over the last few months again, might be a little bit overplayed. It's certainly warranted to a degree, but there's quite a few countervailing facts there.

Richard Sverrisson - Editor-in-Chief, Montel News: 20:12

But if we switch the discussion of to gas, so what do you see happening next? We've, you know, there's been a bit of calm now after the last week or the rollercoaster ride of the last couple of two weeks. What, what happens next in, in the global gas markets? Do you think?

Saul Kavonic - Head of Energy Research, MST Marquee: 20:26

Alright, so recapping that things are still tight in the wake of the Ukraine war, what has changed, particularly since we last spoke is, and I remember when we last spoke and we talked about market would be tight for a few years post Ukraine, but then as the l and g supply ramped up, particularly from the Qatar in the US, we could see oversupply ventilate from 2026 through to 2029. That views changed, right? And why? I think we highlighted last year why it could change already as it's playing out now, is supply's late? The, a lot of the US Pro, so some of the US projects are late, particularly likes the Golden Pass. Arctic two has not really managed to get cargoes out. Even Qatar might potentially be a little bit late. Plus again, this later demand and demand resiliency suggests that oversupply in 2026 no longer looks like it's on the cards. It's been pushed down to 2027, and I can make a very good case for why oversupply won't eventuate at all. That's further delays across a number of projects, plus more me demand growth in parts of Asia and. If you look at what's happening in the US there's severe EPC constraints in building these projects and the next wave of U-S-L-N-G is now gonna be slower and smaller than previously thought. And I'll take, run you through what that was, 'cause this has all happened the last 12 months. Biden put that DOE port, the Biden administration put the DOE ports was a political move, meant to be only nine months that both parties were gonna overturn it at the election, regardless of who won. The damage has been so much longer than nine months because what's happened by pausing these projects for only nine months is massive cost. Deflation has taken place in the interim, and so all these projects which were close to ready to go, had long-term contracts signed up with off-takers to underpin their project finance or the cost structures got up. Those contracts are no longer sufficient to underpin finance it instead having to renegotiate all of those contracts. So you might have had a for example, a toll on your US l and g facility of $2 20. You need $2 80. And so you're going to renegotiate this. And some of the buyers, the ed users recognize this and say, okay, we'll renegotiate to $2 80. But there's a lot of buyers, particularly the portfolio players and the traders who looking this and say, you know what? We are not willing to renegotiate the toll hire. We are happy with our $2 low toll. And then the project comes back and says, but yeah, but then we can't do our project and it dies. And the offtaker says. Yeah, we're okay with that too because if the project dies, it's just good for the overall market and the competing parts of their own portfolio. And I'll give you an example. As an Australia, what is Australian based? Woodside's just bought in to, or just bought Laureate, which is essentially stress acquisition and is about to commit within the next month really to a 17 million ton project. And that will build within five, six years, that'll be 30 million tons. Why has a company like Woodside started to build a US LNG project? And the answer is because Woodside wanted to get us volumes went after a number of projects, they're all being delayed or fallen over. And Woodside came to realization, if you want us volumes, you're gonna have to build it yourself. You can't just buy it from someone else and that. But it shows how a lot of these projects are falling over and delayed, and that next wave of U-S-L-N-G therefore is not coming as quickly. It's gonna be smaller, it's gonna be later. And again, that tightens up the LNG supply demand outlook through the rest of this decade and coming back, to the tariff side of things. This is actually a kind of a fascinating dynamic in the moment because on the one hand, the erraticness that we've seen from the tariff announcements, at least that's how it's been perceived by many LNG buyers, is making the risk premium around us. LNG supply security. It's heightened that risk premium. People are a bit more wary about how reliable the US is gonna be as a supplier, but particularly'cause there's risk that as an LNG buyer, your country might place reciprocal tariffs. Or it return from the tariffs Trumps posing. So that's the one side of things. But the other side of things is as part of the tariff negotiations. The Trump administration's effectively pressuring a lot of buying countries to buy us LNG to help Remi minimize the trade deficit with the US to aid those tariff negotiations. And so again, it's this push pull thing where on the one hand, US looks like a riskier place to buy LNG, but on the other hand, there's more pressure to sign up and for a long-term investment and supply deals from the US to remedy the trade imbalance. And if you're a big LNG buyer, how do you respond to that? Do you buy more us LNG or do you buy LNG from elsewhere? And the answer increasingly appears to be you do both. But are we going? But again, so

Richard Sverrisson - Editor-in-Chief, Montel News: 25:15

Countries don't buy LNG. Well, maybe some do, I mean in Europe, but it's companies that do, it's the portfolio places, the traders. It's the big oil and gas majors who are buying the fuel, not countries as such. I'm, how does this all stack up?

Saul Kavonic - Head of Energy Research, MST Marquee: 25:29

What you are seeing is, while it is companies, effectively it's countries, so you'll see to a degree you're seeing it in Europe where like for example, the German governments effectively supporting LNG purchases, but particularly in Asia, those major Japanese, Korean utilities, some of the biggest LG buyers in the world, they're inseparable from the governments of those countries. And so it's one and the same. And you'll see for example, the Japanese, the Koreans, and others. I think they're gonna sign up more US L and g deals, and I think you'll see some of those potentially very soon, but at the same time, because they're more wary of the US as well. They're also looking to invest in and take off, take from non-US L Energy. And what you are seeing is a reversal of the trend from 2014 to about 2022, where they were, where you saw the big utilities. We want less long-term contracts. We are willing to take more spot exposure. We are going back to the old school model where we better contract a lot more, have equity and a lot more, and actually, if necessary, over contract our positions and we can onsell the volumes elsewhere. Supply security is trumping, small term kind of optimization in terms of cost management, and that's a very big trend. We haven't seen it in the contracting behavior to a great degree yet. You're starting to, and for example, JIRA's purchase of the Scarborough LNG project last year. I think it's a signal of how Jira being the biggest, Ja biggest LNG buyer in the world. They're back to taking material equity cheat pieces such as small ones, a long-term offtake. And I think you'll see the likes of them do that more, both in the US and outside the us in the wake of these tariff negotiations.

Richard Sverrisson - Editor-in-Chief, Montel News: 27:19

Now. Fascinating developments here. Absolutely. And I think just to round off or bring it back, the discussion back to Europe as well, there's been a lot of focus on, on, on the price spreads between the summer and the winter contracts in Europe and the difficulty of filling the storage. What's your view here? There's talk of the policy, the regulations being a little bit more flexible in terms of the actual target, but also in the timeframe what's your view? Will Europe struggle to, to fill the winter storage for the winter 25, 26 in the current market conditions and the geopolitical reality?

Saul Kavonic - Head of Energy Research, MST Marquee: 27:50

Well, I think actual physical shortages are very unlikely. They're reasonably well placed. Again, we actually do have some energy supply ramping up, particularly in the second half of this year, which is gonna aid that. I think we must have been complacent, though. It does mean a period of more elevated pricing than otherwise would be, and more elevated pricing means shortages. It just means not shortages in Europe, it means shortages in countries that can't afford to pay, particularly, for example, in South Asia. And this is not a it's. Good for the industry in terms of their profits, but it's not good overall. And this is the kind of pricing you want to see to incentivize more supply and that's why it's been so unhelpful to have, for example, that Biden pause last year, which restricted a lot of that supply. I think, what we were watching very closely in Europe is if there is some sort of ceasefire with Russia and Russia makes gas available to Europe again. What is the level of appetite from Europe to take those volumes? And I think one of the fears for the LNG industry, and particularly more pronouncing in markets in financial markets than in industry itself, is every indication is, even if there was a sustainable ceasefire, and that's an if and even if the gas was made available and that was an if. Europe would take a small amount of volume, but nowhere be nowhere, not allow itself to be anywhere near as reliant as was in the past, but one of the fees in markets is, that's a nice position to take now, but as time passes. Taking a little bit more and a little bit more, and a little bit more Russian gas become increasingly attractive and it starts to displace some of the l and g demand and we end up back in the situation we found ourselves in 2022 in 10 years time. And I hope that's not the case for geopolitical reasons, in addition to the health of the global LNG trade, but it is something that is weighing on financial investors' minds right now.

Richard Sverrisson - Editor-in-Chief, Montel News: 29:47

And then certainly this overdependence of reliance on very unpredictable and very sort of unstable providers of LNG. I think that's the new reality here, isn't it?

Saul Kavonic - Head of Energy Research, MST Marquee: 29:58

It is. And a, again, coming as an Australian, Australia went first in 2022, where new government took all hostile policy action towards LNG development and Australia's long earned reputation over decades as reliable supply was brought into question. Now, fortunately for Australia, that's Australia's now seen as a relatively more reliable supply. But that's unfortunate for the industry because it's not that Australia's getting better. It's that the political risk, the above ground risk profile for L Energy supplies across the world is now rising. The. Everywhere seemed to have high political risk. Everywhere seemed to be as not as reliable supply as it has been in the past for various domestic and geopolitical considerations. And what that means is you now have to put a premium on security supply beyond what was there in the past. Prices have to be elevated on average beyond what they otherwise would've been. And just as I think the Ukraine War and some of the developers in the Middle East have seen the. That the peace dividend dissipates, and that has implications for overall cost and budget for defense around the world. The security of supply dividend, we central from LNG, has dissipated over the last few years and that's gonna see elevated costs to ensure there's more supply that's contract that they needed more built-ins, logistics and supply chains. And ultimately it's result in higher prices and the higher costs across the globe. And all trends that we've seen, including the tariff trends over the last few weeks are continuing to support things in that direction.

Richard Sverrisson - Editor-in-Chief, Montel News: 31:32

I could sit here for hours discussing this, but we've gotta come to a close. Now, I've only covered maybe a third of my questions, but a fascinating discussion and certainly I think one thing's for sure that we'll have a lot more unpredictability and volatility going forward. Thank you very much for joining me on this episode of Plugged In and hopefully we'll have you back again soon to discuss the wider ramifications, maybe by, by the end of the year or early next.

Saul Kavonic - Head of Energy Research, MST Marquee: 31:58

Thank you. Always a pleasure.