China has stopped sales of LNG to Europe to make sure its own households have enough gas for the winter, report says

Market Insider ^ | 10/17/22

[EBH]

China told state-owned natural gas importers like Sinopec and CNOOC to halt LNG sales to Europe, per Bloomberg.

The order to halt resales comes as Beijing looks to protect domestic gas supplies for the winter.

China has been a crucial supplier of gas to Europe as the region faces a Russia-driven energy crisis.

Beijing has reportedly told state-owned natural gas importers to halt resales of cargoes to buyers in Europe and Asia, to make sure China has enough supply for domestic needs this winter.

The National Development and Reform Commission has spoken to Chinese energy giants PetroChina, Sinopec and CNOOC to ask them to stop the shipments of liquefied natural gas, Bloomberg reported Monday, citing people with knowledge of the matter.

An economic slowdown in China after Beijing imposed a strict zero-COVID policy dampened local demand for gas, leaving its importers with a surplus of natural gas that they resold to Europe and elsewhere.

Since the Ukraine invasion, China has been snapping up Russian fuel on the cheap, after sanctions and boycotts hit the Western market. At one point, China managed to get a 50% discount on LNG supply from Russia's Sakhalin 2 export plant.

But with European gas inventories quickly filling up and shipping costs at record highs, the appeal of the LNG resales dimmed, per Bloomberg.

Another potential trigger for the move were forecasts for a small deficit in China's gas supply, the report said, as the country looks to avert its own potential energy crunch during winter's cold months.

Countries like Germany are on track to hit their winter gas inventory targets, after appealing for consumers to cut usage and scrambling to secure alternative supplies to those cut off by Russia.

[BobL]

“Poor Germany. It will only be able to retrieve 70% of the natural gas that it stuck in its underground storage and it will come out much more slowly than it went in the ground. It is going to be a bad winter.”

Yep, not the same as above-ground storage, where the tanks have moving caps to maintain pressure. The problem with underground storage is that there are no ‘caps’ to push the gas out, so as its depleted, the pressure goes down and the gas gets harder and harder to retrieve.

Germany will soon find that out.

[Vaduz]

China need not fear Biden will sell them the last drop of oil we have.

Xi happy with investment