• Sign up for the Daily Digest E-mail
  • Facebook
  • Twitter
  • LinkedIn

BOE Report

Sign up
  • Home
  • BOE Intel
  • Headlines
    • Latest Headlines
    • Featured Companies
    • Columns
    • Discussions
  • Well Activity
    • Well Licences
    • Well Activity Map
  • Property Listings
  • Land Sales
  • M&A Activity
    • M&A Database
    • AER Transfers
  • Markets
  • Rig Counts/Data
    • CAOEC Rig Count
    • Baker Hughes Rig Count
    • USA Rig Count
    • Data
      • Canada Oil Market Data
      • Canada NG Market Data
      • USA Market Data
      • Data Downloads
  • Jobs

U.S. supplies give China muscle to become major force in global LNG trade

February 11, 20225:30 AM Reuters0 Comments

LNG Tanker

Chinese firms are set to become a major trading force in the global liquefied natural gas market in coming years, thanks to liberalisations at home and recently signed long term contracts for record amounts of LNG from U.S. suppliers.

Setting their sights beyond the domestic market, state-run Sinopec Corp, Sinochem Group, privately-controlled ENN Natural Gas Co and China Gas are building up trading teams from Beijing, Singapore to London.

China’s push into the international LNG market comes two decades after it made a similar big splash in oil trading, and will put its firms in competition with established players like Shell, TotalEnergies and Vitol.

Fortunately, the pie is growing. By 2027, analysts forecast spot trade in LNG will be $20 billion, more than double its 2020 value.

Last year, China’s imports soared by 18% to a record 79 million tonnes, overtaking Japan as the world’s largest LNG buyer. China’s economic recovery from the COVID-19 pandemic was one factor, but the other was a pipeline reform that allowed more firms to become importers.

Felix Booth, Head of LNG at Vortexa, drew parallels with the way in which Japan’s largest LNG importer, JERA, evolved from “a large end-user to a powerful integrated portfolio player” over the past decade.

“I foresee the Chinese national oil companies achieving a similar transition at an accelerated pace, enabled by a favourable market for long term supply of flexible cargoes and growth of Chinese natural gas demand,” Booth said.

The size of the contracts signed with U.S. suppliers should leave Chinese traders with ample amounts of LNG to trade on the global market, after meeting domestic demand, said one Beijing-based trader.

Late last year, Chinese firms nL4N2Q513J signed up over 10 million tonnes a year of LNG with U.S. exporter Cheniere Energy and Venture Global nL1N2RG083, with supplies extending through the mid-2040s’ and provisions for flexibility in marketing destinations for the bulk of the purchases.

Unipec, a trading arm of Sinopec that already rivals Vitol as the world’s top oil trader, is beefing up its LNG desks outside China, having moved two Beijing-based staff to London and added a third trader to its Singapore team late last year.

“LNG now makes up less than a tenth in Unipec’s turnover, but it will be where the growth comes from in the future,” said a company executive, who declined to be named as he was not authorized to speak to media.

Signalling the impact of Unipec’s growing presence in the market, the firm’s largest-ever sell tender nL1N2U615Y last month led in part to a 36% fall in Asian spot prices this year – though it has so far awarded a much smaller volume than the more than 40 LNG cargoes for 2022 delivery that it originally sought.

Chinese state energy major CNPC’s new pipeline gas deal with Russia is also expected to boost LNG sales in the spot market in coming years.

“By having multiple pipelines from Russia, Central Asia, along with their still growing domestic production, expanding LNG portfolio, and increasing storage capacity they (Chinese firms) will certainly have the ability to divert greater numbers of cargoes into the spot and short-term markets,” said Tamir Druz, managing director at Capra Energy.

Chinaoil, the trading unit of state energy giant PetroChina and by far the largest Chinese LNG merchant, last year traded over 15 million tonnes outside China, emerging as a rival to trading houses Vitol and Trafigura, said traders.

ENN, China’s first private city-gas distributor operating a large receiving terminal for LNG, is another rising trader and has boosted its trading team accordingly, having become the first Chinese company to sign a major supply deal with a U.S. firm since 2018.

Analysts, however, said that Chinese companies’ long-term success hinges on whether they can better manage price risks, build shipping capability and own a terminal asset in Europe.

LNG PetroChina Shell SINOPEC

Follow BOE Report
  • Facebook
  • Twitter
  • LinkedIn

Sign up for the BOE Report Daily Digest E-mail

Successfully subscribed

Latest Headlines
  • Tourmaline declares quarterly dividend, announces election of directors and updates forest fire situation
  • TOP WELL REPORT – April volumes – Ovintiv gets knocked off of top spot on the natural gas side while 8 different companies have top oil wells
  • Avila Energy Corporation is pleased to announce the Company’s acceptance of an initial financing commitment of U.S. $10 Million in Convertible Debentures and agreed upon use of proceeds in 2023
  • US natgas climbs as hot weather outlook boosts power demand prospects
  • 30 Days ‘Til The Calgary Stampede – It’s Time To Book Your Corporate Tables

Return to Home
Alberta GasMonthly Avg.
CAD/GJ
Market Data by TradingView

    Report Error







    Note: The page you are currently on will be sent with your report. If this report is about a different page, please specify.

    About
    • About BOEReport.com
    • In the News
    • Terms of Use
    • Privacy Policy
    • Editorial Policy
    Resources
    • App
    • Widgets
    • Notifications
    • Daily Digest E-mail
    Get In Touch
    • Advertise
    • Post a Job
    • Contribute
    • Contact
    • Report Error
    Featured In
    • CamTrader
    • Rigger Talk
    Data Partner
    BOE Network
    © 2023 Stack Technologies Ltd.