Prof. ST Hsieh
Director, US-China Energy Industry Forum
- Importers in discussions to buy Russian LNG at deep discount
- Companies use cautious approach to avoid overseas backlash
April 3, 2022, 9:53 PM PDT
China’s top liquefied natural gas importers are cautiously looking to purchase additional Russian shipments that have been shunned by the market in a bid to take advantage of cheap prices.
State-owned companies including Sinopec and PetroChina are in discussions with suppliers to buy spot cargoes from Russia at a deep discount, according to people with knowledge of the matter. Some importers are considering using Russian firms to participate in LNG purchase tenders on their behalf to hide their procurement plans from overseas governments, the people said.
Most LNG importers around the world won’t buy Russian cargoes out of fear of future sanctions or damage to reputation, as the war in Ukraine drags on and the European Union ratchets up pressure against Moscow. Chinese firms are emerging as some of the only companies willing to take on that risk.
PetroChina declined to comment. Sinopec didn’t immediately respond to a request for comment during a holiday.
This mimics a similar move by China’s oil refiners, which are also discreetly purchasing cheap Russian crude that the rest of the world doesn’t want. Several LNG shipments were already purchased by Chinese importers in the last few weeks, traders said.
Russian LNG is trading at more than a 10% discount to normal North Asia shipments in the spot market, according to traders. Spot prices for the super-chilled fuel surged to a record last month due to the war in Ukraine, which is tightening supplies just as global consumption rebounds.
To be sure, China isn’t in dire need of LNG as milder weather and Covid-19 lockdown fears have curbed spot demand. Still, Russian gas at a deep discount can help top up storage tanks before prices rise again this summer.
US ramps up oil imports from Russia, pursues own interests at expense of European allies amid Ukraine crisis
Published: Apr 04, 2022 07:45 PM
In a contrasting move to its pressuring of European allies to not buy Russian oil against the backdrop of the ongoing Ukraine crisis, the US increased crude oil supplies from Russia by 43 percent, or 100,000 barrels per day, over the past week, Russian Security Council Deputy Secretary Mikhail Popov told Russian media on Sunday, with critics pointing out that the US pursues its own interests at the costs of its European allies.
According to the Russian official, Europe should expect similar “surprises” from the US.
“Moreover, Washington allowed its companies to export mineral fertilizers from Russia, recognizing them as essential goods,” Popov added.
The US and European allies have been exploring banning imports of Russian oil since Russia-Ukraine conflict started, despite the fact that Europe relies on Russia for crude oil and natural gas.
Europe faces pressure from both the US and the UK to impose a ban on Russian oil. Britain has announced that it would phase out Russian oil imports by the end of the year.
Meanwhile, US Treasury has set deadline to end deals on oil and coal imports from Russia until April 22.
Cui Heng, an assistant research fellow from the Center for Russian Studies of East China Normal University, told the Global Times that the US policy toward Russia is centered on two aspects – one being liberalism to counter Russia’s political system and collective ideology and the other being pragmatism to serve US national interests.
“Out of the need to ideologically confront Russia, the US woos allies to sanction Russia, while out of the need of reality, the US buys Russian energy at a cheaper price and sells them to Europe at a higher price to serve the interests of domestic oil interest groups. In the end, Europe becomes the victim – European wealth flows to the US and helps consolidate the dollar’s advantage against euro,” Cui said.
US liquefied natural gas exports rose nearly 16 percent last month to a record high, according to preliminary Refinitiv data, with shipments to Europe continuing to dominate.
US LNG is in high demand as European countries try to cut gas imports from Russia after its military operation in Ukraine, while also looking to rebuild diminishing inventories.
Local media reported that Europe has been the top importer of US LNG for four consecutive months, taking about 65 percent of US exports.
In a joint agreement, the US announced on March 25 to provide at least 15 billion cubic meters more of liquefied natural gas to Europe this year, seeking to end the bloc’s dependence on Russian energy exports. These additional volumes of LNG are expected to increase going forward, the White House said in a statement.
Mick Wallace, a member of the European Parliament, tweeted a video of his parliamentary speech, saying that Europe should indeed wean itself off its dependence on Russian energy, but must not replace it with “filthy fracked Gas” of the US, which has invaded other countries more than any other country in the world, according to media reports.
Analysts said the biggest beneficiary from Russia-Ukraine crisis and ban on Russian oil is the US while some netizens mocked the US move as ensnaring its European allies.
“I believe the target of the US [in sanctioning Russia] is not Russia at all, but European countries,” commented one Chinese netizen.
By buying oil from Russia and reselling it to Europe, the US can make a profit, said some Twitter users.