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China Is Reselling LNG Cargoes, Driving Gas Prices Lower

Major Chinese liquefied natural gas (LNG) importers are now offering to resell some cargoes on the spot market this year, suggesting that China has stocked up more than enough to see it through the winter and easing concerns about the global gas crunch.

Natural gas prices fell on Wednesday and Thursday after reports emerged that major state-owned LNG importers in China have turned to the spot market to sell some cargoes.

The trading arm of China Petroleum & Chemical Corporation, or Sinopec, issued this week a sales tender to sell dozens of LNG cargoes for delivery between February and October, traders familiar with the matter told Bloomberg on Wednesday. According to the traders, this will be the first time that Sinopec has offered to sell such a large number of LNG cargoes, up to 45.

China National Offshore Oil Corporation (CNOOC), the largest Chinese importer of liquefied natural gas, is also tendering a cargo each month between May and November, Bloomberg reported on Thursday.

The moves from some of the biggest LNG importers in China suggest that the country has managed to stock up well on gas before the energy crunch sent natural gas prices surging at the end of last year. Milder weather in China so far this winter has also helped Beijing to see a comfortable supply of gas.

However, traders are anxious that the LNG offering could signal expectations from the Chinese state majors that the zero-COVID policy could hit gas demand in the country, Bloomberg notes.

Meanwhile, the influx of LNG cargoes to Europe offset fears of low Russian supply and the rising Russia-Ukraine tensions to send European gas prices lower on Wednesday. The LNG inflows pushed Europe’s gas prices lower, despite geopolitical trends such as increased tensions between Russia and Ukraine, delays in the Nord Stream 2 pipeline, and eastward flows on the key Yamal-Europe pipeline for the 30th consecutive day with no further exports to Europe planned from Gazprom in February.

By Tsvetana Paraskova for Oilprice.com

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