Page 6 - GLNG Week 37 2022

GLNG COMMENTARY GLNG

War in Ukraine continues to

influence global LNG flows

COMMENTARY The war in Ukraine and the resulting sanctions several cargoes from the Sakhalin-2 LNG plant
on Russia continue to influence global LNG were sold for delivery to China at nearly half
flows. In recent days, China was reported to be the current spot price in a tender that closed in
buying up discounted Russian LNG as less gas recent days.
flows from Russia to Europe. However, it con- Even at half the current spot price, however,
tinues to divert some cargoes to other countries the LNG remains profitable given how high
amid depressed demand at home, while other prices have risen recently. And for China, access
buyers are potentially more willing to pay higher to cheaper supplies represent an opportunity to
prices for gas. resell more expensive volumes from elsewhere to
Meanwhile, US LNG producers continue other buyers in Europe and Asia.
to target the European market, where buyers According to a separate Bloomberg report,
are seeking alternatives to Russian gas with China National Offshore Oil Corp. (CNOOC)
increasing urgency ahead of the winter. Oth- is reportedly offering to sell a cargo from the
ers are seeking to buy LNG from US terminals North West Shelf project in Australia. This fol-
with a view to potentially reselling it to Europe, lows similar moves by China’s other state-owned
as seen in recent moves and comments made by energy giants, Sinopec and PetroChina, to resell
super-major Chevron. However, there have also LNG cargoes from US LNG terminals to buyers
been warnings that the US will need more gas in Europe earlier this year.
for its domestic market as the winter approaches. “It appears China is happy to take Russian
While Ukraine has made recent territorial LNG cargoes at discounts, swapping out alter-
gains, Russia has reiterated its commitment to native supply that can then be directed to Europe
the war and its goals in Ukraine. Thus there is at higher prices,” a Credit Suisse energy analyst,
still no end in sight, and the impact on the global Saul Kavonic, was quoted by Bloomberg as
LNG trade will be ongoing. For China, this rep- saying.
resents continued access to cheaper Russian The report added that smaller Chinese LNG
LNG. For the US, it is a reason to keep focusing importers including ENN Energy Holdings and
on European buyers as new liquefaction capacity JOVO Group had also been actively offering
starts up over the years ahead. to sell shipments for delivery to ports in Asia,
according to traders familiar with the matter.
Discount LNG Russian LNG exports to China are estimated
As Europe increasingly shuns Russian gas – and to have reached their highest level in at least
Russia itself restricts pipeline flows to Europe two years in August. At the same time, LNG
– China has emerged as an attractive alterna- shipments from the US to China have slumped.
tive destination. Citing traders familiar with Indeed, both US sellers and Chinese buyers are
the matter, Bloomberg reported this week that currently keen to divert cargoes to Europe.

P6 www. NEWSBASE .com Week 37 16•September•2022