LNG

China National Offshore Oil Corp. and French energy and utility company Engie have completed a yuan-settled liquefied natural gas trade through the Shanghai Petroleum and Natural Gas Exchange, the third such LNG trade achieved by the Chinese.

The yuan transaction was completed on the Shanghai Petroleum and Natural Gas Exchange (SHPGX), according to a statement from the trading platform.

The statement added that under the yuan-denominated agreement an LNG cargo of about 65,000 tonnes would be delivered in November.

China has recently emphasized its need where possible to settle oil and gas trades in yuan in an attempt to establish its currency internationally and to weaken the dollar's dominance in energy trading.

CNOOC had previously conducted China's first yuan-settled trade with French major TotalEnergies in March 2023 and Singapore's Pavilion Energy also settled such a deal in August.

Das Island cargo

The first 2023 yuan-settled LNG trade involved TotalEnergies and Abu Dhabi National Oil Company’s trading unit as well as CNOOC.

The cargo from that transaction arrived in May 2023 and was unloaded at the main terminal in southern Guangdong province.

The shipment from Das Island in Abu Dhabi in the United Arab Emirates was delivered by the “Mraweh” LNG carrier, a mid-sized vessel with 135,000 cubic metres of capacity.

CNOOC said at the time that the cargo delivery to the Dapeng terminal marked progress by China towards more yuan settlement of cross-border energy trade

CNOOC had purchased the Das Island cargo from TotalEnergies at the Shanghai Exchange.

China has raised the issue over the past several years of seeking more use of the Chinese currency with nations like Saudi Arabia and other energy exporters.

Analysts note that the Chinese economy would benefit hugely even if China only partly paid for its oil and gas in yuan.

China 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.

July 3 (LNGJ) - China's import price index for liquefied natural gas rose this week, according to data from the Shanghai Petroleum and Natural Gas Exchange (SHPGX). The LNG index is for delivered cargoes, not including tax. The most recent quote for Cost, Insurance and Freight (CIF) delivered cargoes was given as 2,344 yuan ($331) per tonne, or $6.35 per million British thermal units, compared with the previous week’s price to June 24 of 2,308 yuan ($326) per tonne, or $6.25 per MMBtu.

   The index, jointly developed by a monitoring centre under the General Administration of Customs and the SHPGX, was launched on October 16, 2019, and offers CIF cargo price guidance for Chinese importers.

The Shanghai Oil and Gas Exchange (SHPGX) said that the Chinese major, China National Offshore Oil Corp., had agreed to buy two cargoes of liquefied natural gas from Royal Dutch Shell with offset carbon emissions, marking China’s first such gas purchase.

June 18 (LNGJ) - China's import price index for liquefied natural gas rose in the week to June 17, according to data from the Shanghai Petroleum and Natural Gas Exchange (SHPGX). The LNG index is for delivered cargoes, not including tax. The most recent quote for Cost, Insurance and Freight (CIF) delivered cargoes was given as 2,647 yuan ($374) per tonne, or $7.17 per million British thermal units, compared with the previous week’s price to June 10 of 2,060 yuan ($291) per tonne, or $5.58 per MMBtu.

   The index, jointly developed by a monitoring centre under the General Administration of Customs and the SHPGX, was launched on October 16, 2019, and offers CIF cargo price guidance for Chinese importers.

June 3 (LNGJ) - China's import price index for liquefied natural gas rose in the week to June 3, according to data from the Shanghai Petroleum and Natural Gas Exchange (SHPGX). The LNG index is for delivered cargoes, not including tax. The most recent quote for Cost, Insurance and Freight (CIF) delivered cargoes was given as 2,586 yuan ($363) per tonne, or $7.06 per million British thermal units, compared with the previous week’s price of 2,184 yuan ($307) per tonne, or $5.96 per MMBtu.

   The index, jointly developed by a monitoring centre under the General Administration of Customs and the SHPGX, was launched on October 16, 2019, and offers CIF cargo price guidance for Chinese importers.

May 11 (LNGJ) - China's import price index for liquefied natural gas dropped in the week ending May 8, according to data from the Shanghai Petroleum and Natural Gas Exchange (SHPGX). The LNG index is for delivered cargoes, not including tax. The most recent quote for Cost, Insurance and Freight (CIF) delivered cargoes was given as 2,504 yuan ($353) per tonne, or $6.84 per million British thermal units, compared with the previous week’s price of 2,894 yuan ($408) per tonne, or $7.91 per MMBtu.

The index, jointly developed by a monitoring centre under the General Administration of Customs and the SHPGX, was launched on October 16, 2019, and offers CIF cargo price guidance for Chinese importers.

China National Offshore Oil Corp., the largest liquefied natural gas terminal owner, is planning to open up several of its facilities to third-party access (TPA) and expressions of interest are required by the end of March in the proposal backed by the Shanghai Petroleum and Natural Gas Exchange.

The initiative by CNOOC and the Shanghai Exchange are part of a series of natural gas market reforms to back increasing demand for imports to support both economic development and the government’s clean air policies.

The Shanghai Petroleum and Natural Gas Exchange was inaugurated in November 2016 after a year-long trial operation as part of energy reforms in China.

CNOOC, owner of nine of China's 19 onshore import terminals, sold imported LNG for the first time on the exchange in April 2018 for forward delivery.

Under the Chinese TPA plans, each third-party user must take in a minimum of four cargoes, equivalent to 260,000 tonnes per annum, over 10 years.

A statement by the Shanghai exchange said that this requirement may be increased in multiples of four cargoes.

“The long-term TPA could be granted to more than one company, while there were no firm rules yet on the amount,” according to the statement.

Analysts said that while the initiative opens the way to allow more independent buyers to enter the market, there was concern about having to lock in third-party customers in terms of price and volumes for a 10-year term.

Expressions of interest have to be submitted by March 31. The exchange said subsequent negotiations would then take place in April and May on pricing and delivery details.

During a trial for the process held in 2018 by CNOOC and the exchange, TPA was offered at the Yuedong LNG terminal in the southern province of Guangdong at the end of October and at the Ningbo facility in the eastern Zhejiang province in November.

The Chinese proposal is a move towards the policies of the European Union requiring member states to provide open access to gas infrastructure, including LNG terminals.

The conditions and tariffs of TPA to regulated LNG terminals in Europe must be published by terminal operators as well as approved by the national regulator.

However, in the Europe market exemptions to the regulated TPA regime have been granted to six major operating terminals: three in the UK, the Isle of Grain, Dragon LNG and South Hook facility, one in France at Dunkirk LNG, one in Italy at the Adriatic terminal and one in the Netherlands at Gate LNG in Rotterdam.

The Shanghai Petroleum and Natural Gas Exchange said natural gas transactions reached a record high last year as demand jumped because of gas replacing coal in the general energy mix and as the northern cities adopted policies to reduce pollution.