China halts LNG sales to foreign buyers to ensure own supply

China told its state-owned gas importers to stop reselling LNG to energy-starved buyers in Europe and Asia in order to ensure its own supply for the winter heating season, Report informs referring to Bloomberg.

The National Development and Reform Commission, the nation’s top economic planner, asked PetroChina Co., Sinopec and Cnooc Ltd. to keep winter cargoes for domestic use, according to people with knowledge of the matter who asked not to be named as the information isn’t public. While the sales had offered some relief to European buyers, rapidly filling inventories and record-high shipping costs also reduced the appeal of reshipping fuel, they said.

Forecasts for a small gas supply deficit likely spurred the move by Beijing, which has pledged to keep houses warmed this winter. The resales had marked a stark turnaround for China, which last year overtook Japan to become the world’s biggest importer of LNG on the back of increased purchases on the spot market but may post its first ever drop in gas consumption in 2022.

Still, a move by China to secure its own supply could drain shipments to Europe and exacerbate the region’s energy crunch in the case of a cold 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.