After becoming the world’s largest importer of liquefied natural gas, China is now looking to become a factor in global LNG trade, analysts tell Reuters.
China was the single biggest contributor to the rise in global LNG demand in 2021, after a lackluster 2020, due to the pandemic slump in global energy demand.
“With its LNG demand bolstered by clear policy support and strong gas market fundamentals, China’s top spot looks assured for years to come,” Gavin Thompson, Vice Chairman, Energy – Asia Pacific at Wood Mackenzie, said last year, commenting on China’s status of no.1 LNG importer.
Now Chinese firms that are major LNG importers are building trading teams in London, Singapore, and other markets, according to Reuters. The Chinese traders will have to compete with supermajors Shell and TotalEnergies, as well as the world’s largest independent oil trader, Vitol.
China has recently signed major long-term supply deals with U.S. LNG exporters, which will boost LNG imports into China further.
Chinese firms have signed long-term supply deals for U.S. LNG, including a Cheniere agreement with Sinochem Group, and one between Venture Global LNG and Sinopec, which, Venture Global says, will be “the largest single LNG supply deal ever signed by a US company and will double imports of US LNG to China.”
Chinese LNG importers are back on the market for long-term deals with American exporters after the year-long hiatus of zero Chinese imports of American gas at the height of the trade war in 2019 and early 2020.
The United States has returned to exporting LNG to China after a year without U.S. LNG shipments to China between March 2019 and February 2020. American exports to China started rising toward the end of 2020 to reach a record high in August 2021, the latest available EIA data shows.
According to a trader based in Beijing who spoke to Reuters, the volumes in the contracts recently signed with U.S. LNG developers and exporters are expected to bring large amounts to Chinese traders to trade on the global market, once domestic demand has been met.
China could have success if it owns a terminal in Europe, secure enough vessels, and manage price risks, analysts told Reuters.
By Charles Kennedy for Oilprice.com