Page 6 - NorthAmOil Week 04 2022

NorthAmOil COMMENTARY NorthAmOil

China reportedly seeks to

resell LNG amid gas crunch

Two of China’s state-owned energy giants have reportedly offered to

sell a number of LNG spot cargoes in a move that has surprised the

market and could help ease pressure on Europe

GLOBAL THE global natural gas crunch is giving rise Up for resale
to some unusual developments. According to The reported resales come after China spent
WHAT: reports by Bloomberg last week, China – which much of the past year buying up spot LNG sup-
CNOOC and Sinopec are recently became the world’s largest importer of plies and restocking inventories in preparation
reported to be offering to LNG – is reselling some of its supply in a move for this winter. Those efforts, in turn, had been
resell LNG cargoes on the that has surprised the market. spurred by the spike in gas demand in North
spot market. The cargoes, which would be sold over the Asia over the winter of 2020-21, which sent LNG
course of the year, could help alleviate some spot prices to then-record highs. The spike had
WHY: of the pressure on Europe, which continues to been exacerbated by supply bottlenecks such as
The moves indicate that struggle with low pipeline deliveries and inven- congestion in the Panama Canal, which is used
China is well-stocked tories but has already seen an uptick in LNG by LNG carriers to reach Asia from the US.
with natural gas and the deliveries this month. China was keen to avoid a repeat of that situ-
companies see resales as According to traders cited by Bloomberg, the ation this winter, which led to additional LNG
a profitable option. resales could also suggest that there are concerns purchases over the course of 2021, and indeed
in China about a looming dip in demand, simi- allowed it to overtake Japan to become the
WHAT NEXT: lar to what was seen in 2020 following the emer- world’s leading LNG importer. Now, though, the
Additional LNG from gence of the coronavirus (COVID-19). This is country seems secure enough in its gas supply
China could help ease backed up by consultancy Rystad Energy, which – and even potentially concerned about over-
the pressure on Europe, cited “tepid demand in Asia” in its weekly gas supply. As a result, two of the leading Chinese
where demand remains and LNG market note on January 19 and said state-owned oil and gas companies released ten-
high. short-term gas demand was likely to be muted ders this week for dozens of cargoes for delivery
in China owing to curbs following the latest by November.
COVID-19 surge in the country. The traders cited by Bloomberg said that

P6 www. NEWSBASE .com Week 04 27•January•2022