Chinese companies profit by redirecting liquefied natural gas from the US to Europe

The economic slowdown in China, a Trump-era trade deal and Europe’s desperate search for natural gas are generating gains for Chinese energy companies. With demand low, Chinese companies that have signed long-term contracts to buy U.S. liquefied natural gas are selling off the excess and earning hundreds of millions of dollars per load. Buyers include Europe, Japan and South Korea.

Chinese customs data shows that China is getting nearly 30% more gas from Russia so far this year. The increase is due to growth in scheduled delivery of the Force of Siberia pipeline and purchases of Russian LNG, usually at a deep discount.

However, Chinese sales to Europe are small to help the continent avoid a shortage this winter, but provide a preview of Moscow’s growing dependence on Beijing. Chinese companies are easing their effort to sow divisions in Europe, halting gas exports.

The contracts, which last up to 25 years, have given US suppliers the confidence to build more multibillion-dollar LNG terminals along the Gulf Coast, increasing the country’s ability to export more gas.

China’s ENN Natural Gas is expected to profit from this trade when it sends the Diamond Gas Victoria LNG tanker to pick up a cargo of gas from the Cheniere Energy Inc plant. in Sabine Pass, Louisiana, on the Gulf Coast on Oct. 18, according to three industry sources.

Since 2021, US suppliers and Chinese buyers have announced 16 deals for a total of around 19 million metric tons of LNG per year, which will gradually come into effect over the next five years.

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