Business Day

Beijing’s gas-buying spree comes at worst possible time

- Stephen Stapczynsk­i /Bloomberg

China is escalating its purchases of liquefied natural gas (LNG) for the winter, worsening a global supply shortage and leaving less fuel for energy-starved Europe.

China is struggling to get enough coal to power factories and heat homes this winter as the world’s second-biggest economy faces a potential energy-crunch scenario similar to the chaos gripping Europe.

That has spurred some of the country’s energy giants, such as state-owned Sinopec, to dive back into the LNG spot market, seeking shipments of the fuel in preparatio­n for a time when temperatur­es turn colder. Natural

gas prices from Europe to Asia have surged to seasonal highs as the post-pandemic recovery collides with supply constraint­s.

The situation was already strained by China s insatiable appetite for LNG to fuel its economic rebound it is poised to overtake Japan as the world’s top importer of the fuel this year.

Many of China s LNG buyers among the biggest in the world

had temporaril­y paused spot procuremen­t when prices began to surge during summer.

Traders were betting that spot rates would slide, but that did not happen, and now companies are jumping back into the game. Sinopec issued a tender on Tuesday for at least 11 cargoes of LNG through March, one of the largest winter purchase requests by a Chinese company in months.

Smaller importers, including Beijing Gas Group and Guangzhou Gas Group, are also seeking to buy shipments for October and November.

Sinopec was one of the most active Asian buyers last winter, often buying more cargoes than requested in tenders.

Their return to the spot market could spook other buyers in Asia, and trigger panic buying as rivals want to secure supplies before prices rise further.

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