(Bloomberg) -- China is looking to stock up on liquefied natural gas for winter, returning to the spot market in a move that risks reducing supply to other importers.
Unipec, the trading arm of Sinopec, released a tender to purchase more than a dozen shipments for this winter, in addition to deliveries through the end of 2024, according to traders with knowledge of the matter.
While it isn’t clear if Unipec’s shipments are to meet domestic demand or for use in its trading portfolio, this is still the biggest push by a state-owned Chinese importer to procure LNG from the spot market since February.
China’s LNG imports fell by 20% last year due to virus restrictions and high prices. While deliveries have increased this year, they’re still below 2021 levels, when China was the world’s top buyer.
The nation’s potential return to the market could curb the availability of LNG for Europe, which is turning to the super-chilled fuel to replace pipeline gas deliveries from Russia.
Risks from frigid weather to strikes and China’s appetite for fuel threaten to disrupt the LNG market’s delicate balance, according to executives and analysts at the Gastech conference in Singapore last week.
The shift also comes as China’s LNG importers are booking more slots at import terminals, likely in an effort to build inventories ahead of the winter heating season, according to BloombergNEF. Still, there are more slots available at terminals than a year ago, reflecting the healthy inventory levels and sluggish economic growth that will weigh on gas demand.
Other spot market news:
- Kansai Electric, a Japanese utility, purchased an LNG cargo on a DES basis for Oct. delivery
- Oman LNG is offering two cargoes on a DES basis for Oct. delivery to Asia
- Thailand’s state-run energy company PTT is looking to buy three LNG cargoes on a DES basis, one a month, between October and December
- Indian Oil Corp. issued a tender seeking to buy one LNG cargo on a DES basis for late-Oct. delivery to the Dahej terminal
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