China’s offshore oil and gas major CNOOC Ltd 0883.HK has bought more than 10 liquefied natural gas (LNG) cargoes for delivery between July and next March, reports Nasdaq.
China’s economy rebound
The state-owned firm’s purchase is on the back of higher spot LNG prices LNG-AS, which have doubled since early March, as China’s gas demand grows with rebounding economic growth.
CNOOC bought 12 to 15 cargoes, which is higher than the 10 cargoes it initially sought for the period, two of the sources said.
Price details could not immediately be confirmed, but one source said that August cargoes may have been awarded at about $10.70 to $10.80 per million British thermal units (mmBtu) while cargoes for winter delivery may have been awarded at a discount to North Asian prices.
CNOOC officials declined to comment on the matter.
Strong gas demand
Gas demand especially from the industrial sector in China has been strong due to an improving economic growth, traders said.
“Demand is strong especially in the south where there is a general shortage for power which is boosting demand for both gas and coal,” a source based in China said, declining to be named as he was not authorised to speak to media.
Industries to curb power
Several cities in China’s southern province Guangdong, a major manufacturing hub, have asked industry to curb power use by suspending operations for hours or even days as high factory use combined with hot weather strain the region’s power system.
As a result, some provinces in southern China are seeing tight gas supply at gas-fired power plants, the Shandong provincial energy administration said last week.
Gas supply contracts
It added that the three major national oil companies – CNPC, Sinopec and CNOOC – signed gas supply contracts with Shandong for the supply of 22.2 billion cubic metres (bcm) for 2021, up 9.4% year-on-year.
“We expect this winter, with more coal-to-gas switch and elimination of coal boilers, the gas supply will remain tight during the heating season,” it added.
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