Page 11 - GLNG Week 35 2022

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China resells LNG to Europe

CONTRACTS CHINA is selling its surplus LNG cargoes to first sixth months of this year.
Europe, providing the latter with some relief COVID-19 restrictions as well as the fall-out
as European gas prices soar as a result of the from weaker economic growth meant that Chi-
summer heatwaves and cutbacks in Russian gas na’s real gross domestic product (GDP) growth
supply. in the first half of the year amounted to a mere
European LNG imports soared 60% year on 2.5%. Meanwhile, the central government has
year in the first six months of this year, accord- also taken steps to bolster energy production
ing to Kpler, amounting to 53mn tonnes. At the amid the energy crisis, and involves bringing
same time, Chinese imports dropped 20.3% y/y more coal-fired power plants back online at the
in January to July, as demand has been crippled expense of LNG demand. According to Nikkei
by coronavirus (COVID-19) pandemic restric- Asia, Shanxi Province, for example, has boosted
tions. While those restrictions are starting to be its coal output by 100mn tonnes to 1.3bn tonnes
eased, in the meantime China has the opportu- this year and plans to add a further 50mn tonnes
nity to resell LNG it does not need to Europe. of supply in 2023.
According to Nikkei Asia, Chinese LNG China has also stepped up its own gas supply,
trader JOVO Group recently disclosed it had with domestic production on track to rise by 7%
resold an LNG cargo to a European buyer, and y/y in 2022, according to gas consulting firm SIA
a futures trader told the news site that the profit Energy. The drop in China’s LNG needs has had
from such a deal could amount to tens of mil- implications for international prices. LNG prices
lions of dollars and possibly even $100mn. Chi- in Asia are currently at around $45 per mmBtu,
nese energy giant Sinopec also acknowledged while European prices are exceeding $60 per
in April that it had been diverting excess LNG mmBtu. In a typical year, LNG supplies to Asia
cargoes to the international market. Local media sell at a premium to European deliveries, but
reports estimate that Sinopec alone has resold 45 that long-running trend reversed late last year as
cargoes of LNG, or around 3.15mn tonnes, and a result of Russian cuts to Europe’s gas supply and
the total amount of resold Chinese LNG was other factors.™
likely equal to 7% of Europe’s gas imports in the

Week 35 02•September•2022 www. NEWSBASE .com P11