Page 5 - GLNG Week 07 2022

GLNG COMMENTARY GLNG

spot and short-term markets,” a Capra Energy publicly available.
managing director, Tamir Druz, was quoted by Nonetheless, some Chinese LNG cargoes
Reuters as saying. have been re-sold, and more will likely follow.
A day after news of the tenders emerged, Argus
Resales launched Media reported that an LNG carrier was en
Indeed, this appears to have started already. route to Europe from China’s Yangpu LNG ter-
In January, two of China’s state-owned energy minal, illustrating that resales on the spot mar-
giants, CNOOC and Sinopec, launched tenders ket are already taking place.
for the resale some of their supply. This came
amid escalating geopolitical tensions in Europe What next?
as a result of the Russia-Ukraine crisis, with ris- Not only are gas prices high, with profits to be
ing European gas prices also helping to make the made, but the spot market is also growing. Reu-
continent a more attractive destination for spot ters cited analysts as forecasting that by 2027,
cargoes. the LNG spot trade will be $20bn, or more than
Those involved in the LNG trade do not double its value in 2020. Against this backdrop,
typically publicise commercial arrangements it is not surprising that Chinese companies, hav-
such as spot cargo sales, but traders have been ing already established themselves as buyers, are
reported as saying that the two companies sold keen for a larger share of the market. Not only are gas
fewer cargoes than expected. CNOOC was Nor is such a foray into trading without prec-
reported to be offering one cargo per month edent among major buyers of LNG. Reuters prices high, with
between May and November, while Sinopec also quoted Vortexa’s head of LNG, Felix Booth, profits to be
was seeking to sell up to 45 cargoes for deliv- drawing parallels with the way Japan’s largest
ery between February and October via its Uni- LNG importer, JERA, had evolved from “a large made, but the
pec trading arm, according to traders cited by end-user to a powerful integrated portfolio
Bloomberg. Several days later, Reuters reported player” over the past decade. spot market is
– also citing traders – that Sinopec had only suc- Those making inroads into the spot mar-
ceeded in selling 5-7 cargoes in the tender after ket include Chinaoil, the trading arm of Pet- also growing.
failing to agree on a price with buyers. roChina, which last year traded over 15mn
“The small number of cargoes awarded pos- tonnes of LNG outside China, emerging as
sibly means that the cargoes they offered do not a rival to trading houses Vitol and Trafigura
have that kind of flexibility buyers asked for,” the according to traders cited by Reuters. Unipec
news service quoted a Singapore-based trader and ENN are also continuing efforts to grow
as saying. “But Sinopec seemed quite sure that their LNG trading businesses.
these are the redundant supplies for China’s The limited interest in CNOOC and Sino-
off-peak seasons, as they’re among the best pec’s recent tenders shows that there are still
informed guys of the domestic Chinese market.” some obstacles for Chinese traders to overcome.
CNOOC, too, is thought to have received Nonetheless, it also suggests that more sales of
limited interest in the cargoes it put up for Chinese cargoes onto the spot market should be
re-sale, though details have not been made expected in the future.™

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