This courtesy of Andrei Piriutko

https://tapnewswire.com/2022/09/europes-bacon-saved-by-russian-gas-coming-from-china/


Welcome back to reality…

China wanted to keep its arms-length gas dealing with Russia as unclear as possible, which is why the General Administration of Customs of China stopped publicizing the breakdown in trade volume for pipeline natural gas since the beginning of the year, with spokesman Li Kuiwen confirming that the move was to "protect the legitimate business rights and interests of the relevant importers and exporters”.

Well, we now know the answer: China has been quietly reselling Russian LNG to the one place that desperately needs it more than anything. Europe... and of course, it is charging a kidney's worth of markups in the process.

As the FT reported recently, "Europe’s fears of gas shortages heading into winter may have been circumvented, thanks to an unexpected white knight: China." The Nikkei-owned publication further notes that "the world’s largest buyer of liquefied natural gas is reselling some of its surplus LNG cargoes due to weak energy demand at home. This has provided the spot market with an ample supply that Europe has tapped, despite the higher prices."

What the FT ignores, is that it's not "surplus" - after all, if it was Chinese imports of Russian LNG would collapse. No - the correct word to describe the LNG that China sells to Europe is Russian.

Going back to the story, the details are intuitive: with Russian pipeline gas to Europe effectively shuttered...
... Europe’s imports of LNG have soared 60% year on year in the first six months of 2022, according to research firm Kpler.

Some more details:

China’s JOVO Group, a big LNG trader, recently disclosed that it had resold an LNG cargo to a European buyer.

A futures trader in Shanghai told Nikkei that the profit made from such a transaction could be in the tens of millions of dollars or even reach $100mn.

China’s biggest oil refiner Sinopec Group also acknowledged on an earnings call in April that it has been channelling excess LNG into the international market.

Local media have said that Sinopec alone has sold 45 cargoes of LNG, or about 3.15mn tonnes. The total amount of Chinese LNG that has been resold is probably more than 4mn tonnes, equivalent to 7 per cent of Europe’s gas imports in the half year to the end of June.

Make no mistake: all of this "excess" LNG was soured in part or in whole in Russia, but since it has been "tolled" in China, it is no longer Russian. It is instead - drumroll - Chinese LNG.

Hilariously, it also means that instead of being dependent on Russia for gas, Europe is now becoming dependent on Beijing instead for its energy - which is still Russian gas, only this time imported from China - which makes a mockery of US geopolitical ambitions to defend a liberal international order with its own energy exports.

Worse, while Europe could buy Russian LNG for price X, it instead has to pay 2X, 3X or more, just to virtue signal to the world that it won't fund Putin's regime, when in reality is is paying extra to both Xi and to Putin, who is collecting a premium price thanks to the overall market scarcity.

Posted by: Timothy Birdnow at 01:48 PM | Comments (2) | Add Comment
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