China has told its state-owned gas importers to stop reselling liquefied natural gas (LNG) to foreign buyers as the government aims to secure the nation’s own supply for the winter heating season, Bloomberg reported on Monday.
People with knowledge of the matter told the news outlet that the National Development and Reform Commission has asked PetroChina, Sinopec, and CNOOC to keep their winter supplies for domestic use. While the sales had offered some relief to European buyers, rapidly filling inventories and record-high shipping costs also reduced the appeal of reshipping the fuel, the sources reportedly said.
Domestic demand for energy had been falling in China in recent months, prompting Beijing to resell excess LNG in the global market. Europe, Japan, and South Korea were among its key buyers.
Data shows that after the EU heavily reduced Russian gas purchases, imports of LNG to the bloc have increased by 60% year-on-year, despite being much more expensive than pipeline deliveries.
However, current forecasts for a small deficit in the gas supply likely spurred the move by Beijing, which has pledged to keep houses warm this winter. On Sunday, President Xi Jinping addressed energy security concerns during his two-hour speech.
According to Bloomberg, the move by China to secure its own supply could drain shipments to Europe and exacerbate the region’s looming energy crunch this winter. “China holds large contracts to purchase LNG from exporters like the US, with the Asian nation’s traders diverting some of that supply to Europe this year amid lackluster demand at home,” the outlet reports.