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EurOil                                        COMMENTARY                                               EurOil

       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

        CHINA            THE global natural gas crunch is giving rise  supplies and restocking inventories in prepara-
                         to some unusual developments. According to  tion for this winter. Those efforts, in turn, had
       WHAT:             reports by Bloomberg this week, China – which  been spurred by the spike in gas demand in North
       CNOOC and Sinopec are   recently became the world’s largest importer of  Asia over the winter of 2020-21, which sent LNG
       reported to be offering to   LNG – is reselling some of its supply in a move  spot prices to then-record highs. The spike had
       resell LNG cargoes on the   that has surprised the market.  been exacerbated by supply bottlenecks such as
       spot market.        The cargoes, which would be sold over the  congestion in the Panama Canal, which is used by
                         course of the year, could help alleviate some  LNG carriers to reach Asia from the US.
       WHY:              of the pressure on Europe, which continues to   China was keen to avoid a repeat of that sit-
       The moves indicate that   struggle with low pipeline deliveries and inven-  uation this winter, which led to additional LNG
       China is well-stocked   tories but has already seen an uptick in LNG  purchases over the course of 2021, and indeed
       with natural gas and the   deliveries this month.      allowed it to overtake Japan to become the
       companies see resales as   According to traders cited by Bloomberg,  world’s leading LNG importer. Now, though, the
       a profitable option.  the resales could also suggest that there are con-  country seems secure enough in its gas supply
                         cerns in China about a looming dip in demand,  – and even potentially concerned about over-
       WHAT NEXT:        similar to what was seen in 2020 following the  supply. As a result, two of the leading Chinese
       Additional LNG from   emergence of the coronavirus (COVID-19).  state-owned oil and gas companies released ten-
       China could help ease   This is backed up by consultancy Rystad Energy,  ders this week for dozens of cargoes for delivery
       the pressure on Europe,   which cited “tepid demand in Asia” in its weekly  by November.
       where demand remains   gas and LNG market note on January 19 and said   The traders cited by Bloomberg said that
       high.             short-term gas demand was likely to be muted  Sinopec is offering up to 45 cargoes for delivery
                         in China owing to curbs following the latest  by October, while China National Offshore Oil
                         COVID-19 surge in the country.       Corp. (CNOOC) is offering to sell one cargo per
                                                              month between May and November. The tenders
                         Up for resale                        represent roughly 4% of China’s LNG imports in
                         The reported resales come after China spent  2021 and the news service described them as one
                         much of the past year buying up spot LNG  of the biggest offerings from the Asian country.

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