Sinopec launches large tender for LNG purchases

By Rhod Mackenzie

The Chinese state-owned company Sinopec will be holding a tender to buy large volumes of LNG on the spot market. Analysts fear that the already high prices will return to last year's levels and that previously European bound cargoes will start to flow to Asia.

Chinese companies are returning to the LNG spot market. The trading arm of state-owned giant Sinopec has announced an additional tender for more than a dozen LNG cargoes this winter (more than 1.2 billion cubic metres). Bloomberg reports this with reference to traders. The agency notes that this is the largest LNG purchase by a Chinese state-owned company since last February.

"China's return to the market will reduce the availability of LNG for Europe, which is buying it to compensate for the decline in imports of Russian fuel," - noted Bloomberg.
The reporter Stephen Staprzynski writes on X that it is not yet clear whether China is buying the LNG for itself or for resale, but company executives have already expressed concern at the Gastech conference in Singapore that possible Chinese actions will upset the balance in the market.
Europe's storage facilities are 94% full, but underground gas storage is only one source of gas in winter. In addition, a strike at two LNG projects in Australia and repair work and possible production disruptions in Norway are making the situation worse.

According to the ICE exchange, gas supplies from the TTF hub for this winter are trading at $590 and are now at $414. This is at least 2.5 times higher than the average wholesale gas price in Germany in the previous five years before the crisis.