Industry Ministry: Higher US oil and gas production could benefit imports to Czechia

Higher oil production and natural gas output in the US, backed by new US President Donald Trump in his inaugural address, could ultimately have a positive impact on imports of these commodities to Czechia as well. Higher production volumes would increase pressure to lower the prices of these commodities on global markets. Petra Milcová, spokeswoman for the Ministry of Industry and Trade (MPO), told the Czech News Agency (ČTK). Trump also pledged to immediately declare an energy emergency, enabling new production projects in the US to be approved without delay.

Overnight, as well as before Monday's inauguration, Trump again threatened to impose new tariffs on imports from the EU unless the bloc's member states import more oil and gas from the US. He also said his administration was considering imposing a new 10 percent tariff on imports from China from 1 February. „Upon taking office, he also signed a number of executive orders, which primarily target the domestic economic situation. During the election campaign, he mentioned possible tariffs of 10 to 20 percent on European imports into the US, but no formal steps have yet been taken in this regard,“ Milcová said.

According to the MPO, Czechia, as a landlocked country dependent on imports of energy commodities, can expect rather positive impacts, although ensuring access to global energy markets is crucial. The impact on Czech coal-fired power plants will depend on the extent of the fall in fossil fuel prices on global markets and on the European Union's response, the MPO said. Should the price of liquefied natural gas (LNG) decline, its price in the EU can also be expected to fall, which, according to Milcová, could ultimately affect the economics of operating coal-fired power plants. „This would reduce their profitability and also improve the economics of gas-fired generation. This effect was brought about by unconventional natural gas production and the subsequent fall in its price, which led to the retirement of around 40 percent of coal capacity in the United States over a decade,“ she added.

Transmission statistics from Net4Gas at the end of last year show that the overwhelming majority of gas imported into Czechia towards the end of last year flowed in from the east. While most supplies to the Czech Republic came from the west for most of the year, deliveries from Slovakia rose sharply from the beginning of November, accounting for around 95 percent in the final two months. According to experts, this was primarily Russian gas.

Sev.en, the operator of coal-fired units in Czechia, also believes that changes in supplies of US gas to the EU would very likely affect its prices as well as electricity prices in Europe. However, according to its spokeswoman Gabriela Sáričková Benešová, the company has so far received no signals that the European rules governing its operations are set to change in connection with Trump's return, and therefore substantially affect its business. Subsidiaries of the group owned by billionaire Pavel Tykač include the Chvaletice lignite-fired power plant and the Vršanská uhelná mining company in Most.

According to MPO data, the US and the EU have the world's largest trade relationship in terms of mutual trade in goods, services and investment. In 2023, the value of mutual trade in goods and services was EUR 1.54 trillion (CZK 38.7 trillion). For Czechia, the United States is an important trading partner and its largest export market outside Europe.

Among all Czech export markets, the US ranked 11th in 2023, with goods exports worth more than USD 5 billion (CZK 112 billion), while total mutual trade turnover stands at around USD 10.7 billion (CZK 258.5 billion). According to the ministry, the importance of the US as an export destination for Czech businesses stems from the fact that it is a large and innovative market, while exports to the US are also characterised by higher value added.