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Chinese digital yuan has been used in its first cross-border oil deal for 1 million barrels on the Shanghai Petroleum and Natural Gas Exchange (SHPGX) from PetroChina International Corp Ltd.
The transaction took place on October 19, and represents the first time, amid a slow-moving de-dollarization push, that digital yuan has been used to complete a translation for oil, though no further details of the transaction have been made available.
The price of the deal has not been disclosed.
The transaction was heralded by state-run China Daily as “another major step forward” for the digital currency.
This milestone for the Chinese digital currency, e-CNY, follows a series of payments for oil and gas imports using the Chinese yuan.
Last week, China settled a liquefied natural gas (LNG) trade between China National Offshore Oil Corp (CNOOC) and French Engie in yuan, for 65,000 metric tons of LNG to the Chinese company next month.
Earlier in March, China also made its first LNG purchase using yuan between CNOOC and French TotalEnergies.
Overall, yuan cross-border settlements have risen by 35% year-on-year, according to China Daily, putting the total for the first three quarters of 2023 at a value of $13.9 trillion in settlements.
The state-run daily cited Bank of China senior researcher Wang Youxin as saying that despite the Chinese currency’s increased volatility this year, it is gaining greater global recognition and steadily advancing internationalization.
This advancement comes as BRICS (Brazil, Russia, India, China and South Africa) works towards a new world order not dominated by the dollar.
In August, BRICS agreed to take on six new members that would render the grouping far more powerful. Those new members, set to join in January 2024, include Saudi Arabia, Iran, Ethiopia, Egypt, Argentina and the UAE.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com