As China’s economy struggles to rebuild, its demand for LNG has proven lower than expected, and China is making a profit off selling the excess gas to energy-strained Europe, Japan, and South Korea for a premium, according to a new Wall Street Journal report this week.
As a result, one of the world’s largest LNG importers, has suddenly found itself a large-scale exporter.
Because China’s purchases are arranged under long-term contracts with US LNG producers, Chinese energy company’s are paying a fraction of the higher prices seen in today’s tight market, making each cargo shipped worth hundreds of millions of dollars.
The Journal noted that from January to August of last year, China had of 133 US LNG ships docked in its ports. However this year, during the same period, only 19 ships were seen docked.
In addition the outlet noted that not only is China reselling US LNG, but it is also buying large quantities of cheap discounted Russian LNG, increasing its imports by about 30%, allowing it to ship more US LNG back out of the country and on to more energy-starved markets. China’s Russian LNG imports surged in August, hitting the highest level in two years.
According to Bloomberg sources, China contracted several shipments of LNG from Russia’s Sakalin-2 LNG export plant in Russia’s Far-East through December for prices at roughly half the current spot-price.
Despite chilled LNG costing far more than pipeline deliveries of natural gas, as Europe’s gas imports from Russia dropped from 40% of imports to 9%, Europe’s LNG imports are up 60% year over year.
