China emerges as global LNG trading power

China is expanding its presence in the global LNG trading world, with Chinese traders setting up new or expanding their trading desks in Singapore and London.

This would put China in direct competition with LNG trade leaders including Shell, BP, TotalEnergies, and Equinor, the report pointed out.

The trading presence expansion comes even as China secures more long-term supply of the superchilled fuel, the latest deals coming from Qatar and the United States.

Even so, Chinese importers are not relying on long-term deals only, even if they have swelled to some 40 million tons annually since last year. The amount represents a 50% increase.

More than 10 Chinese energy trading companies are hiring more traders or expanding their trading desks while state-owned CNOOC plans to open an office in London.

Speaking of CNOOC, the Chinese major said this month that Novatek’s Arctic LNG 2 project will start production as scheduled before the end of this year. CNOOC has a 10% stake in the Russian project.

The core motive for the trading presence expansion appears to be energy security—the focus of China’s energy policies.

As a result of this expansion, Reuters notes, the total volume of LNG contracted by Chinese traders could reach 100 million tons annually by 2026. That would mean an excess supply of some 8 million tons for that year, per Poten & Partners. On the other hand, ICIS sees the amount as falling short of demand by 5-6 million tons.