Page 6 - EurOil Week 04 2022

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