Russia, faced with Western sanctions, has decided to reduce its gas deliveries to Europe. So much so that the latter is very worried about its ability to hold out next winter.
As our colleagues from RTBF report, based on information from the Financial Times, China is taking advantage of this energy crisis and turning into a “lifeline” for Europe.
How is it possible? China has never been a gas exporting country. On the contrary, following the coronavirus crisis, its economy is slowed down as well as all its energy production. The country is therefore forced to import even more than before. RTBF argues that China thus imports 40% of its energy needs and has become the world’s largest importer of LNG (liquefied natural gas). Finally, China finds itself with gas surpluses which partly come from Russia and has understood the gain it could derive from it by reselling it… to Europe, which is in high demand.
As relayed by RTBF, Chinese companies active in the energy sector “would resell their cargoes two to three times more expensive to Europeans on the spot market. Unlike the futures market, the spot market makes it possible to buy in cash cargoes that exist physically and whose transport is already in progress”. According to our colleagues, China has thus sold at least 4 million tonnes of surplus LNG this year, a volume which would represent 7% of the natural gas imported by Europe during the first half of 2022.
If we remained quite discreet about these operations in China, the Chinese daily Global Times has just made a confession: “Chinese LNG companies are increasing their supplies amid growing demand from European customers.” In this article, we also learn that Chinese companies have increased their purchases abroad by more than 10%, with the firm intention of reselling this gas to Europeans. No precision on the other hand on the origin of the gas imported by the Chinese, but according to the specialized site oil.com, it would indeed be Russian gas. The site reports that imports of LNG from Russia would have jumped by 30% compared to the previous year. Also according to oil.com, the Chinese, who therefore act as intermediaries between Russia and Europe, “would take advantage” to multiply prices by two or three when reselling to Europe.