China’s LNG Tender for Winter Energy Security

Credit: Ti Gong_


In a strategic move to ensure winter energy security, Unipec, the trading arm of Sinopec, has issued a notable tender for LNG cargoes, signaling China’s commitment to safeguarding supplies in the face of evolving market dynamics.

  • Unipec, the trading arm of Sinopec, surprises the market with a large-scale LNG tender to secure winter supplies, reflecting China’s commitment to supply security.
  • China’s spot LNG demand remains muted due to ample inventories and slow downstream gas demand, prompting a cautious approach to procure winter cargoes.
  • Unipec’s exploration of market-based pricing for 2024 volumes may aim to expand trading opportunities rather than stockpiling, as smaller Chinese buyers await potential demand recovery after November.

Securing Winter Supplies

Unipec, the trading arm of Sinopec, China’s national oil company, has raised eyebrows by issuing a tender to purchase up to 25 LNG cargoes from October 2023 to December 2024. This move reflects China’s intention, as the second-largest LNG importer, to ensure sufficient stocks ahead of the winter season.

Unexpected Tender Amid Muted Demand

Unipec’s tender has caught market participants off guard as China’s spot LNG demand has remained subdued this year due to ample inventories and sluggish downstream gas demand. The tender sought cargoes for the upcoming winter season, aiming to secure supply for heating demand and potentially building stocks for a gradual demand recovery in 2024.

A National Plan for Supply Security

Industry sources suggest that the Chinese government has encouraged companies to secure necessary volumes for the entire year to maintain a stable supply. Therefore, Unipec’s tender is seen as a reflection of national supply security goals rather than an indication of a significant prompt demand recovery in China.

Exploring Market-Based Pricing

Unipec’s move to consider JKM-linked pricing for 2024 volumes may be aimed at expanding its trading portfolio rather than solely building stocks in anticipation of demand recovery. Market-based pricing offers more efficient risk management and physical trading options, aligning with the company’s strategic objectives.

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