Russia, faced with Western sanctions, has decided to reduce gas deliveries to Europe. So much so that the latter is very worried about its ability to withstand the coming winter.
As our colleagues at RTBF report, based on information from the Financial Times, China is taking advantage of this energy crisis and is turning into a “lifeline” for Europe.
How is it possible? China has never been a gas exporter. On the contrary, following the coronavirus crisis, its economy has slowed down as has 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 surpluses of gas that partly come from Russia and has understood the profit it could derive from reselling it … to Europe, which is in great demand.
As reported by RTBF, Chinese companies active in the energy sector “resell their cargoes two to three times more expensive to Europeans on the spot market. Unlike the futures market, the spot market allows you to buy cargo for cash that exists physically and is already being transported.”. According to our colleagues, China has thus sold at least 4 million tons of surplus LNG this year, a volume that would represent 7% of natural gas imported from Europe in the first half of 2022.
If we remained discreet enough about these operations in China, the Chinese newspaper Global Times 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. However, no precision on the origin of the gas imported by the Chinese, but according to the specialized site oil.com it would be Russian gas. The site reports that LNG imports from Russia would have increased by 30% over 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 at the time of resale in Europe.