Chinese liquefied natural gas (LNG) companies have increased supplies for the overseas market in response to growing demand from customers in Europe and elsewhere amid what could turn into an unprecedented energy crisis.

The worsening energy crisis has been compounded by geopolitical strife, inflation and other factors, and rising orders from Europe have pushed global natural gas prices to record highs, which may persist as winter approaches.

Energy industry sources and analysts told the Global Times that Chinese companies are gearing up to strike deals with European customers amid strong demand there, and some companies have seen their orders drop. overseas increase in double digits in August.

By late summer, the price of natural gas in Europe had climbed to around $2,500 per 1,000 cubic meters. This has increased by 2.6 times since the beginning of June, according to the media.

A major energy company based in China’s northwest Xinjiang told the Global Times on Monday that it was expanding its trade with international LNG customers, including those in Europe.

“The biggest difference for us this year is that we export more than we import, and our natural gas export volume has maintained double-digit year-on-year growth for the past two months. , thanks to growing demand in Europe,” one said the employee.

The company’s imports come mainly from countries like Australia under long-term contracts signed when prices were relatively low.
The person said that the volume of trade was increasing almost every month, mainly for European customers and that he planned to increase imports further.

Another energy company, JOVO Energy Group, based in southern China’s Guangdong province, reportedly recently resold a shipment of LNG to a European buyer, which attracted media attention.

The company declined to comment. In a response to investors of an online platform, the company said its sales are mainly aimed at domestic end users and it is also actively expanding the international market.

Many EU countries are troubled by a shortage of natural gas supply, as people’s livelihoods and factory operations have been severely affected by the shortage.

TTF natural gas futures, Europe’s benchmark, jumped more than 30% to top 280 euros ($278) per megawatt-hour on Monday, after hitting a three-week low of 203 euros on Friday, as the Russian Gazprom canceled its plan to resume flows through the Nord Stream pipeline and closed it indefinitely, citing maintenance needs, media reported.

Some media have claimed that some Chinese energy companies bought natural gas from Russia and sold it back to Europe, an allegation that has so far not been confirmed by any domestic company.

Europe has rushed to get more supplies from other countries, and its gas storage is 79.94% full, according to data from Gas Infrastructure Europe, Reuters reported.

The reason the Europeans were able to build up their LNG reserves faster than expected was partly thanks to LNG exports from China, the Nikkei reported.

Wang Yu, director of Russia’s Union of Asian Industrialists and Entrepreneurs, told the Global Times on Monday that some Guangzhou-based companies are actively negotiating with the union to purchase bulk LNG, indicating an upward trend in LNG imports.

“The empty bulks will be delivered to the Russian port city of Nakhodka, where they will be loaded with LNG before returning to China,” Wang said.

In terms of LNG source countries, Australia was China’s top supplier in 2021, with a volume of 31.14 million tonnes, accounting for 39.5%. The United States came in second with 11.4%, followed by Qatar and other countries such as Russia and Malaysia, according to industry data.

But experts have warned that Europe cannot expect Chinese suppliers to cover its energy shortages, given that the total amount of gas China can export to Europe is limited, compared to other sources such as Russia.

“There will be Chinese companies involved in exporting LNG to Europe, but the amount is expected to be small and it can hardly meet Europe’s huge energy needs,” said Lin Boqiang, director of the China Center for Energy. energy economics research at Xiamen University. Global Times Monday.

As a major energy-consuming country, China’s import volume has increased year by year and it has become the world’s largest LNG importer. Its external dependence is close to 40%, according to experts.

“China’s natural gas supply is also limited, and the export volume is not large, and it is difficult to resolve the crisis in Europe,” Lin said, adding that other factors, including the shortage of infrastructure such as gas storage tanks and LNG. ships also capped supplies.

As energy supplies hold steady, some European countries have added fuel to the already tense situation by imposing sweeping sanctions on Russia, their main energy supplier.

Gazprom said on Friday that due to the discovery of multiple equipment failures, the Nord Stream 1 pipeline will completely shut down transmission until the failure is cleared, raising fears of shortages and possible power failures. electricity in the coming months.

Kremlin spokesman Dmitry Peskov told reporters on August 31 that EU-imposed sanctions on Russia led to the suspension of the Nord Stream gas pipeline, TASS reported.

Additionally, Group of Seven finance ministers agreed on Friday to impose a price cap on Russian oil, media reported.
At a regular press conference held by the Foreign Ministry on Monday, Spokesperson Mao Ning said in response to media queries that relevant countries should make constructive efforts to ease the situation through dialogue and consultation. , and not the reverse.
Source: GlobalTimes