S. 1035: To prohibit certain exports of natural gas produced or refined in the United States, and for other purposes.

This bill aims to prohibit the export of natural gas that is produced or refined in the United States if that gas is intended to be further exported via foreign liquefied natural gas (LNG) terminals, specifically focusing on Mexico. The key points of this legislation include:

Findings

• The bill expresses concern about exporting natural gas from the U.S. to countries with perceived high levels of corruption, highlighting Mexico's poor ranking in terms of corruption.
• Concerns are raised about Mexico's political and economic environment, where allegations of corruption have led to issues like unauthorized fuel theft and compromised regulatory oversight.
• The bill cites instances where Mexican officials and employees of the state-owned petroleum company, Pemex, have faced threats from criminal organizations, further complicating the reliability and safety of the natural gas supply chain.
• There is a belief that soccer's centralized power in Mexico's executive branch risks political impartiality, casting doubt on fair legal enforcement, contract honorability, and resolution of trade disputes.
• Additionally, the bill mentions violations of energy commitments made by Mexico under the United States-Mexico-Canada Agreement, suggesting that these actions have created an unfavorable trading environment for U.S. investors.

Prohibition on Exports

The main thrust of the bill is to enforce a blanket prohibition on exporting U.S. natural gas to any foreign country if the intent is for that gas to be re-exported through a foreign LNG terminal. This means that exporters cannot send U.S.-sourced natural gas to Mexico if it will then be sent elsewhere. The intention behind this clause is to preserve national economic interests and address national security concerns.

Overall Intent

The overarching goal of this legislation is to safeguard the economic and national interests of the United States by preventing the export of natural resources to countries that may not contribute to stable and fair trading relationships. Through its findings and prohibitions, the bill seeks to limit the risks associated with cross-border natural gas exports, especially to nations perceived as corrupt.

Relevant Companies

• PXD (Pioneer Natural Resources): As a company involved in the production of natural gas, it may be directly impacted by restrictions on exports to Mexico.
• CHK (Chesapeake Energy): Since Chesapeake is engaged in natural gas production, it may face limitations on its ability to export to markets that include re-export processes through foreign terminals.
• ROSE (Rosehill Resources): Similar to others in the sector, export restrictions could affect the trading and supply chain operations of Rosehill Resources, especially in relation to Mexican markets.