Page 5 - NorthAmOil Week 36 2022

NorthAmOil COMMENTARY NorthAmOil

follows similar moves by China’s other state- LNG from Cheniere and Venture Global LNG.
owned energy giants, Sinopec and PetroChina, The super-major already has a significant pres-
to resell LNG cargoes from US LNG terminals ence in the Asian LNG market thanks to its
to buyers in Europe earlier this year. operations in Australia, from where it primarily
“It appears China is happy to take Rus- supplies major buyers of the super-chilled fuel
sian LNG cargoes at discounts, swapping out such as Japan and South Korea.
alternative supply that can then be directed to However, supplying Europe is easier from
Europe at higher prices,” a Credit Suisse energy elsewhere, and Chevron is now seeking to add
analyst, Saul Kavonic, was quoted by Bloomberg assets that are better positioned to meet Euro-
as saying. pean demand. It also has upstream assets in the
The report added that smaller Chinese LNG Permian Basin, and could seek to convert that
importers including ENN Energy Holdings and gas to LNG for transport to Europe.
JOVO Group had also been actively offering Chevron’s vice president for midstream, Colin
to sell shipments for delivery to ports in Asia, Parfitt, told media this week that the company is
according to traders familiar with the matter. now more of a global player and is seeking to Both US sellers
Russian LNG exports to China are estimated meet some of Europe’s growing demand. He
to have reached their highest level in at least two identified the US and the Eastern Mediterra- and Chinese
years in August. At the same time, LNG ship- nean as being among the leading regions that buyers are
ments from the US to China have slumped. could be targeted for this purpose.
Indeed, both US sellers and Chinese buyers are currently keen to
currently keen to divert cargoes to Europe. What next?
One challenge for the US, however, is that it divert cargoes to
Targeting Europe could see more domestic demand for its gas out-
These developments come amid rising concerns put over the winter. Looking further ahead, new Europe.
over tight supply of gas over the coming win- liquefaction capacity is also set to come online
ter. Europe has rushed to replenish its stocks in in the next couple of years that could put fur-
anticipation of ever-declining deliveries of pipe- ther pressure on the US’ gas industry to produce
line gas from Russia. For both US and Chinese more.
LNG players, this represents an opportunity to The US is likely to keep targeting Europe for
sell volumes at a higher profit. now, but over the longer term its LNG will not
Around 70% of what Cheniere Energy – the be enough to supply Europe in the absence of
US’ largest producer of LNG – has gone to Russian gas, and may also cause additional sup-
Europe this year, for example. And others that ply pressures at home. Further realignment of
do not export LNG from the US are still none- global LNG and pipeline gas trade flows will
theless eyeing Europe, including Chevron, likely be needed. For now, though, they remain
which recently signed supply deals to buy US in flux.™

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