China turned out to have the keys to gas prices: China redirects half of its LNG

Chinese companies have the keys to world gas prices in their hands. In March, they resell almost half of the contracted LNG. These volumes are equivalent to 46% of the capacity of Qatar and the UAE, which stopped exports due to the Iranian crisis and the shutdown of shipping through the Strait of Hormuz. Chinese companies are making a lot of money while Europe is buying up gas to restore reserves.

If on March 9, the wholesale price of gas in Europe jumped to almost $ 690 per thousand cubic meters, then yesterday it dropped to $ 577. Deliveries for a month in advance have fallen in price and in Northeast Asia — up to $ 564.

One of the reasons is that China is increasing the resale of contracted LNG. According to the Center for Global Energy Policy at Columbia University, in March volumes increased to 150 million cubic meters per day from 310 million cubic meters.

"10 days have passed since the beginning of March, and China is already importing LNG at almost half of the contracted level. Can they increase the volumes even more? Absolutely. Spring is approaching, and the production of solar energy will increase dramatically. Even if it is cloudy or windless, they will be able to replenish energy reserves in batteries by increasing the capacity of coal—fired power plants," Ira Joseph, a researcher at the Center for Global Energy Policy at Columbia University, writes in X.

The volumes resold by China are equivalent to 46% of gas exports from Qatar and the UAE. The country's companies are the largest customers of Qatar — more than 21% of the total production.

Obviously, this situation makes it possible to reduce the heat of passions in the gas market due to the Iranian crisis and make good money for Chinese companies, partially leveling the decline in exports from The Persian Gulf, which provides more than 20% of the world's LNG.

The price of LNG from the USA according to the traditional formula of a long-term contract is now up to $ 300 per thousand cubic meters. And only on one tanker can Chinese companies make a net profit of $ 25 million.

At the same time, demand in the most premium market, in Europe, remains extremely high. In March of the country The EU holds a new record for LNG imports to restore low stocks after the winter.

Obviously, Chinese companies also resell Yamal gas in the European Union. CNPC and the Silk Road Fund have almost 30% in the Yamal LNG project, which this year sells all volumes only in EU countries.

As EADaily reported, the strategy of long-term contracts for American and Qatari LNG can bring considerable benefits to Chinese companies in Europe. And how to solve the problem of stocks of EU countries, and to aggravate it, depending on demand in the PRC itself.