China is benefitting from LNG sales to Europe as some traders resell non-Russian cargoes at high prices while restocking with cheap Russian fuel

Kayra Reven

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Some traders in China are selling non-Russian LNG cargoes to Europe at higher prices.

They then restock with Russian LNG purchased at deep discounts during the sanctions and boycott.

China’s LNG imports from Russia hit a nearly two-year high in August, according to S&P Global.

China has become the main supplier of natural gas to energy-strapped Europe as it struggles to load up on fuel ahead of winter after Russia cut supplies to the region.

China’s purchase of cheap liquefied natural gas, or LNG, from Russia amid boycotts and sanctions elsewhere over its invasion of Ukraine was an unusual development. China secured a 50% discount on some LNG supplies from the Sakhalin 2 export plant in Russia’s far east, Bloomberg reported last week.

Europe’s energy crisis gets an 8 out of 10 on the fear scale, says Rystad energy analyst. Here are 4 countries at the heart of the crunch.
Europe’s energy crisis is “terrible,” Rystad analyst Fabian Rönningen told Insider.

  • He gave the crisis an eight out of ten on the fear scale.
  • Here are four countries at the center of Europe’s supply crunch.
  • Europe’s energy crisis is “horrendous” and the problem is getting worse, according to Rystad Energy senior analyst Fabian Ronningen.
  • “On a scale of one to ten, I’d probably give it an eight,” Roningen told Insider of the scale of the crisis. “I think that’s how bad it is at the moment. Horrible is a good way to describe it.”

Europe’s energy crisis, triggered by Russia’s invasion of Ukraine and exacerbated by Western sanctions, has hit Germany, France and others with supply shortages this winter.

In apparent retaliation against the sanctions, Russia has cut natural-gas flows to Europe through the Nord Stream 1 pipeline to just 20%, driving up prices. Russian state-owned energy giant Gazprom said European natural gas prices could rise another 60% this winter as exports from the region fall further.

Dutch wholesale natural gas prices, the European benchmark, will hit a record high of around 335 euros, or $341, per megawatt hour in spring 2022, per Reuters. Since then, prices have fallen to around 225 euros per megawatt hour – still a jump of around 300% since the start of 2022.

Matters are made worse by energy-related problems in Norway, France, Germany and Russia. “For the past few weeks, you’ve been asking, ‘How bad can it get?’ That feeling is growing,” Ronningen said.

The interweaving of these four country issues appears to exacerbate the problem of energy supply in Europe.

With cheaper Russian LNG cargoes secured, some Chinese traders are reselling cargoes from other sources at current high prices. S&P pegged LNG prices delivered to northwest Europe at $47.3 per one million British thermal units on Sept. 8 — about 65% higher than before Russia’s invasion of Ukraine.

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