Page 4 - NorthAmOil Week 36 2022

NorthAmOil COMMENTARY NorthAmOil

War in Ukraine continues to

influence global LNG flows

China is snapping up discounted Russian LNG, while also diverting

some cargoes to other countries, and the US continues to target

European buyers

GLOBAL THE war in Ukraine and the resulting sanctions represents continued access to cheaper Russian
on Russia continue to influence global LNG LNG. For the US, it is a reason to keep focusing
WHAT: flows. In recent days, China was reported to be on European buyers as new liquefaction capac-
The war in Ukraine buying up discounted Russian LNG as less gas ity starts up over the years ahead.
continues to affect global flows from Russia to Europe. However, it con-
LNG flows. tinues to divert some cargoes to other countries Discount LNG
amid depressed demand at home, while other As Europe increasingly shuns Russian gas – and
WHY: buyers are potentially more willing to pay higher Russia itself restricts pipeline flows to Europe –
China is snapping up prices for gas. China has emerged as an attractive alternative
discounted Russian LNG, Meanwhile, US LNG producers continue destination. Citing traders familiar with the
while the US is seeking to target the European market, where buyers matter, Bloomberg reported this week that sev-
to send more cargoes to are seeking alternatives to Russian gas with eral cargoes from the Sakhalin-2 LNG plant were
Europe. increasing urgency ahead of the winter. Oth- sold for delivery to China at nearly half the cur-
ers are seeking to buy LNG from US terminals rent spot price in a tender that closed in recent
WHAT NEXT: with a view to potentially reselling it to Europe, days.
Super-major Chevron has as seen in recent moves and comments made Even at half the current spot price, however,
also voiced its intention by super-major Chevron. However, there the LNG remains profitable given how high
to target the European have also been warnings that the US will need prices have risen recently. And for China, access
market. more gas for its domestic market as the winter to cheaper supplies represent an opportunity to
approaches. resell more expensive volumes from elsewhere
While Ukraine has made recent territorial to other buyers in Europe and Asia.
gains, Russia has reiterated its commitment to According to a separate Bloomberg report,
the war and its goals in Ukraine. Thus there is China National Offshore Oil Corp. (CNOOC)
still no end in sight, and the impact on the global is reportedly offering to sell a cargo from the
LNG trade will be ongoing. For China, this North West Shelf project in Australia. This

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