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China’s state energy majors have stepped up the sales of liquefied natural gas to struggling Europe, Bloomberg has reported, citing an unnamed source from the gas market.
Several cargos of U.S. LNG originally destined for China have been re-sold to Europe since the start of the year, the report noted, and right now China’s CNOOC is offering an LNG cargo from Australia’s North West Shelf for delivery in November.
Meanwhile, Chinese imports of Russian liquefied natural gas have been on a strong rise this year. Since the Russian invasion of Ukraine, China’s spending on energy imports from Russia has jumped to $35 billion, from $20 billion a year earlier, Bloomberg reported last month.
Because of strong Russian imports of liquefied natural gas, China has a comfortable surplus supply it can resell to Europe, which is hunting for gas high and low to secure its supply for the winter and is ready to pay any price for the supplies.
In a recent report on the LNG resale topic, however, the FT noted that the situation is precarious for Europe. China is selling LNG it does not need right now because of subdued economic activity. Once activity picks up, however, demand will rebound and there will be no more surplus cargos to ship to Europe.
Sluggish economic growth amid a zero-Covid policy by the central government has caused China’s LNG demand to fall by as much as 20 percent this year, after hitting a high last year that turned the country into the largest LNG buyer in the world.
So far this year, Chinese companies have sold some 4 million tons of liquefied natural gas on the international market, which is equal to about 7 percent of Europe’s gas consumption for the first half of the year, according to the FT.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.