President Donald Trump's administration has given the oil and gas sector its first exclusions from a 25pc tariff on steel imports, after agreeing with Shell and Chevron that the specialty steel they were importing is not manufactured in the US.
The US Commerce Department today approved tariff exclusions for 243 metric tonnes of steel casing and production tubing that Shell said it will use when drilling wells in the US Gulf of Mexico. It also provided a tariff exclusion to Chevron for 50 metric tonnes of corrosion-resistant stainless steel tubing. The waivers will only last a year and are exclusive to the two companies.
The waiver approval marks a victory for the oil and gas industry, which is concerned that the tariffs could raise their costs. The Commerce Department has been working through a backlog of more than 20,000 steel tariff exclusion requests. The agency has has only processed a total of 241 requests since it began issuing waiver decisions on 21 June.
Shell in its request for a n exclusion said no US mills make the type of steel used in offshore wells, where high temperatures and high pressures are usually present. Shell is importing the product from Japanese steel producer Nippon Steel and Sumitomo Metal. The company also said there was a national security argument for approving the waiver.
"It does not serve the national security to delay or increase the cost of fuel extraction in the absence of domestic alternatives, particularly when the natural resources extracted will only serve to fuel the US economy's continued growth," Shell said in its request.
Chevron's waiver request also covered corrosion-resistant steel manufactured by Nippon in Japan that is not made in the US. The company said that domestic oil production was "critical to national security." Commerce denied one of Chevron's applications for a separate tariff waiver on 330 metric tonnes of corrosion-resistant tubing because it said the request was incomplete.
Chevron and Shell did not immediately respond for comment.
The US last week denied a request for a tariff exclusion for 135,000 t/y of steel tubing and casing that Borusan Mannesmann Pipe US said it would import from Turkey. Commerce said the imported products were manufactured in high enough volumes in the US.
