Page 8 - AsianOil Week 26 2022

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Chinese imports of US

LNG plummet by 95%

PERFORMANCE IN the months between February and April,
Chinese imports of US produced LNG plum-
meted by 95%, according to figures from Beijing.
At the same time, China has slowly ramped
up imports of Russian LNG. Customs data
released by the central government indicate
imports from China’s northern neighbour have
increased by at least 50% year on year.
This has raised more than a few eyebrows in
East Asia, where many are worried about Chi-
na’s long-term geopolitical ambitions regarding
Taiwan and other territorial claims in the South
China Sea region.
Speaking recently at the Center for Strategic
and International Studies (CSIS), Nikos Tsafos,
the James R. Schlesinger Chair in Energy and
Geopolitics at the Energy Security and Climate
Change Programme, highlighted some of the
dynamics at play.
“Russia could eventually build a sizable busi-
ness geared toward Asian markets, but the shift
(to this end) will be neither immediate nor easy,”
Tsafos said.
“It will depend critically on foreign partners,
including China,” and “to secure a contract with
China, Russia had to offer a bargain deal: China
pays far less for Russian gas than Europe does”,
he added in an analysis released in May.
Just a year ago, however, the US was China’s
leading supplier of spot LNG cargoes.
And despite the current moves away from
US LNG and preference for Russian-produced several months now been offering cheaper crude
gas, in the long term, China is still expected to to Asian customers against the backdrop of sanc-
honour pre-agreed deals with US exporters tions implemented by European countries.
beginning later this year and into next. Indeed, A number of voices are starting to hint that
Just a year ago, a number of Chinese companies have recently Russian oil exports to the West will never again
struck new supply agreements with US LNG reach levels seen in recent years. It is thought gas
however, the producers. too will likely never return to previous export
For now, though, in the year to date, US highs even if large scale replacements for Russian
US was China’s sources indicate that cargoes being sent to China suppliers may take longer to pin down.

leading supplier are very few and far between. The majority, in the Similarly speculative, albeit somewhat more
wake of Russian aggression against Ukraine and foreboding, are analysts now pointing to China’s
of spot LNG subsequent sanctions, have instead been heading potential to make itself Russia’s premier LNG
export destination.
to mainland Europe.
cargoes. It is understood that European customers are Should this eventually be realised, it is
willing to pay more for LNG spot cargoes than thought that Moscow might then be obliged to
their Asia-based counterparts; one reason Rus- toe the line in backing future Chinese aggres-
sia’s own move east to offload LNG of late will sion against Taiwan and other neighbours in
start to sting financially the longer it continues. East Asia.
France, Holland, Spain and the UK, in addi- For now, though, LNG totals reaching China
tion to Poland, have purchased over 54% of remain tiny compared to volumes of gas once
all US LNG, according to the Department of exported to now declining European markets.
Energy (DoE). Plans are being put in place, however, to
This figure is expected to rise as moves in develop a second major gas pipeline linking gas
support of Ukraine give European countries fields in Eastern Russia and China.
the incentive to finally wean themselves off a If and when this is ever up and running, Chi-
dependency on Russian gas supplies. The same na’s neighbours will have a lot more than just
is true for the Russian oil industry, which has for LNG imports to consider.™

P8 www. NEWSBASE .com Week 26 01•July•2022