Beijing has reportedly told state-owned natural gas importers to stop further sales to buyers in Europe and Asia to ensure China has enough supplies for domestic needs this winter.
The National Development and Reform Commission has spoken to Chinese energy giants PetroChina, Sinopec and CNOOC and asked them to halt supplies of liquefied natural gas, Bloomberg reported on Monday, citing people with knowledge of the matter.
An economic slowdown in China after Beijing implemented a strict zero-Covid policy has dampened local demand for gas, leaving its importers with a surplus of natural gas to resell to Europe and elsewhere.
They threw a lifeline to Europe in the middle of its energy crisis by reselling unneeded LNG bought from Russia. In August, an estimated more than 4 million tonnes of Chinese LNG were sold – or about 7% of European imports in the first half of the year, according to a Nikkei report.
Since the Ukraine invasion, China has been buying Russian fuel cheaply after sanctions and boycotts hit the Western market. At one point, China managed to get a 50% discount on LNG supplies from Russia’s Sakhalin 2 export plant.
But with European gas inventories rapidly filling and transportation costs at record highs, the appeal of LNG resales has faded, according to Bloomberg.
Another potential trigger for the move was forecasts of a small gas supply deficit in China, the report said, as the country tries to avert its own potential energy crisis during the cold winter months.
Countries such as Germany are on track to meet their winter gas supply targets after urging consumers to cut consumption and trying to secure alternative supplies to those cut off by Russia.
The prospect of a European energy crisis sent regional gas prices to record highs above 346 euros ($336) per megawatt hour in August as Moscow responded to Western sanctions over its war on Ukraine. Prices have since fallen by more than 50%, with Dutch TTF futures on the ICE exchange trading lower around €136 per megawatt hour on Monday.
The commission did not immediately respond to Insider’s request for comment.
