When compared to record prices in 2022, current natural gas market prices are still low. However, if China continues to exercise influence on international markets and completes its substantial LNG regasification projects in the anticipated timeframe, the current low costs may soon become a thing of the past. This initiative may have an impact on European petrol markets, but it will mostly benefit Chinese businesses. It’s possible that Brussels, Berlin, or The Hague might not find this arrangement to their tastes. Chinese natural gas imports (LNG and pipeline gas) rose by 17.3% alone in May.
China is showing signs of increasing its consumption of natural gas, but according to a forecast by GlobalData, China will dominate the expansion of LNG regasification capacity in Asia. China will account for 34% of all Asian additions, according to GlobalData. According to the study’s title, “LNG Regasification Terminals Capacity and Capital Expenditure (CapEx) Forecast by Region, Key Countries, Companies and Projects (New Build, Expansion, Planned, and Announced), 2023-2027,” China is expected to increase its capacity by about 5.7 TCF from projects that have already received project approvals, while another 2.1 TCF is currently in the conceptual stages.
China’s demand growth may be stepwise, but given the way things are going, Europe’s petrol consumers will need to act quickly or risk paying exorbitant spot freight costs. While Europe is still unwilling to sign long-term contracts because politicians believe it doesn’t fit their strategy for implementing an energy transition, China is thinking long-term and committing to using natural gas beyond 2045–2050.
Beijing is simultaneously implementing its natural gas policy and expanding its gas-related infrastructure, as well as engaging in a much more sinister strategic game. China reportedly knew about Russian invasion preparations before Putin chose to attack Ukraine, according to reports. The invasion of Ukraine was invaded in February 2022, although Chinese President Xi Jinping has adamantly denied knowing about it up to this point. However, China’s energy transactions before the attack aroused questions. Chinese participants, namely LNG purchasers, were quite active in the six months before the invasion.
Despite the ongoing Russian invasion, Chinese parties have remained active in closing deals. From September 2021 to April 2022, Chinese parties accounted for 57% of all LNG purchase deals, which totaled around 23 million tons of imports per year. This is a significant increase compared to the average of 5 million metric tons per year between 2006 and 2020. The 2021-2022 buying spree involved 11 different companies, 10 of which are owned by the Chinese government. As a result, there has been a surge in demand for LNG supplies from Qatar, Russia, and the US, leading to a shortage in the short term.
These changes occurred in tandem with Gazprom’s plan to reduce gas shipments to Europe in 2021 while cutting off its gas supply after the invasion. Gazprom is a state-owned gas company in Russia. It is increasingly obvious that Moscow and Beijing are working together politically. Russian gas cutbacks to Europe would have had a minimal impact if the Chinese had not entered the gas markets in full force in 2021–2022, eliminating concerns about both a lack of supply and an impending energy crisis. Even before the invasion of Ukraine, there was obvious extensive coordination between China and Russia. All indications point to a Russian-Chinese cornering of the market as a preventative attack on Europe’s energy industry, however, there is no concrete proof of this.
Currently, it seems like Europe is being passive and doing nothing to prevent Beijing and Moscow from working together more and more. By no means is it a novel idea to use energy as a weapon. Energy resources are no longer easily accessible to Europeans at a reasonable cost, as seen by the recent example of expanding collaboration between Beijing and the Gulf Cooperation Council (GCC) in Saudi Arabia. Russia and China are once more strengthening their control over the continent, increasing the likelihood of a turbulent winter in Europe.
Natural Gas Long (Buy)
Enter At: 104.182
T.P_1: 122.200
T.P_2: 147.935
T.P_3: 170.509
S.L: 53.301
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