China Emerges As A Global LNG Trading Power

By Charles Kennedy of Oilprice.com,

China is expanding its presence in the global LNG trading world, with Chinese traders setting up new or expanding their trading desks in Singapore and London, Reuters writes.

This would put China in direct competition with LNG trade leaders including Shell, BP, TotalEnergies, and Equinor, the report pointed out.

The trading presence expansion comes even as China secures more long-term supply of the superchilled fuel, the latest deals coming from Qatar and the United States.

Even so, Chinese importers are not relying on long-term deals only, even if they have swelled to some 40 million tons annually since last year. The amount represents a 50% increase.

Per the Reuters report, more than 10 Chinese energy trading companies are hiring more traders or expanding their trading desks while state-owned CNOOC plans to open an office in London.

Speaking of CNOOC, the Chinese major said this month that Novatek’s Arctic LNG 2 project will start production as scheduled before the end of this year. CNOOC has a 10% stake in the Russian project.

“We’re going to see a paradigm shift in Chinese companies from being total net importers to (being) more international and domestic trading players,” said Trident LNG head of global trading, Toby Copson, as quoted by Reuters.

The core motive for the trading presence expansion appears to be energy security—the focus of China’s energy policies.

“Supply security is still at the heart of our business activities. Trading capability is one of the enablers … to help us better deal with market swings,” according to PetroChina International’s global head of LNG trading, Zhang Yaoyu.

As a result of this expansion, Reuters notes, the total volume of LNG contracted by Chinese traders could reach 100 million tons annually by 2026. That would mean an excess supply of some 8 million tons for that year, per Poten & Partners. On the other hand, ICIS sees the amount as falling short of demand by 5-6 million tons.