China is back on the spot LNG market seeking cargoes for next winter, potentially upsetting a fragile global gas market balance just as Europe reached its gas storage target well ahead of the November 1 deadline.
After a record slump in Chinese gas demand and LNG imports last year due to the Covide-related shutdowns, China’s gas consumption has increased so far this year compared to 2022, but it’s still below the growth seen through 2021.
In recent months, China has signed a number of long-term LNG supply deals. These include with top exporters the United States and Qatar. But with a massive tender for cargoes to be delivered later this year and throughout 2024, China is also back on the spot market.
Increased competition from China and other Asian buyers could leave Europe in an even more vulnerable supply position for the winter of 2023/2024, driving up prices and attracting more LNG cargoes to Asia than EU buyers would like.
Trade sources familiar with the plans told Reuters this week that China’s state-owned energy giant Sinopec, through its trading arm Unipec, recently issued a tender to buy up to 25 LNG cargoes between October 2023 and December 2024.
Sinopec is seeking bids to buy one LNG cargo for delivery in October, five cargoes for November and seven for December 2023. According to Reuters’ sources, the remaining 25 cargoes will be delivered one per month in 2024.