China’s CNOOC and French utility Engie settle LNG trade in yuan

Wednesday, 08 November 2023
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China National Offshore Oil Corp. (CNOOC) and the French utility Engie have completed a yuan-settled LNG trade through the Shanghai Petroleum and Natural Gas Exchange – the third such LNG trade achieved by the Chinese. A cargo of around 65,000 metric tons of LNG will be delivered in November possibly from Abu Dhabi. 

As one of China’s largest gas producers, CNOOC aims for gas to account for half of its domestic hydrocarbon output as gas-burn increases in the country’s power sector. CNOOC is also an LNG import capacity holder at nine regasification terminals, which mostly lie south of Shanghai.

LNG complements CNOOC domestic gas production and the government recently urged companies to settle oil and gas trades in yuan “where possible” in an effort to weaken the US dollar’s dominance in energy trading. CNOOC’s first yuan-settled trade was arranged with TotalEnergies in March, while Singapore’s Pavilion Energy is understood to have also settled such a deal this August.

In April, PetroChina carried out a yuan-settled LNG trade with ADNOC which also involved TotalEnergies. The cargo for that transaction arrive from Das Island in Abu Dhabi in May and was unloaded at the main terminal in southern Guangdong province. CNOOC commented at the time the cargo delivery to the Dapeng LNG terminal marked progress by China towards more yuan settlement of cross-border energy trade.

Analysts suggest the Chinese economy could “benefit hugely” by partly paying for its oil and gas imports in the local currency. Asia’s largest economy imported more than 500 million tonnes of crude oil last year and more than 100 million tonnes of natural gas by pipeline and as LNG and with the LNG portion amounting to 63.44 million tonnes. 

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