Dhe Emir beamed at the praise his guest had just showered on him. During his visit to Qatar in December, Xi Jinping did not bow to the head of the desert state as deeply as Federal Economics Minister Robert Habeck did half a year earlier. China’s president still knew how to tickle Hamad Al Thani’s ego – thanks to football. He believes the current World Cup will be a “complete success,” Xi said. The Emir nodded and a wink seemed to cross his face.
The supply contract for liquefied natural gas (LNG) announced shortly before the start of the World Cup has set new standards. Worth $60 billion, observers have interpreted it as meaning that China could soon become the dominant player in the global LNG market. From 2026 onwards, Qatar will supply Beijing’s gas and oil giant Sinopec with 4 million tons of LNG every year for a period of 27 years.
Returning home in December, Xi summarily ended his zero-Covid dogma, the lockdowns that had paralyzed half the country for months and pushed the economy to the brink of recession.
Now the factories are running again. Because they are supposed to get less of their energy from burning coal in the future, the second largest economy needs gas: from Qatar, from Russia, from the arch-enemy on the other side of the Pacific. China buys what it can get. Two reaching hands in the national flags of the People’s Republic and the USA – the Chinese government no longer often gives its rivals friendly symbolism like this.
Soon the world’s largest importer
Except when it comes to purchasing LNG: The state-owned company China Gas announced on Saturday that 2 million tons of LNG will be received annually from 2027 onwards from the US exporter Venture Global. The mammoth contract runs for 20 years – the Chinese painted the stars and stripes on the press release out of sheer joy.
In Europe, on the other hand, there is fear about the new major buyers from the Far East. After years of importing increasing amounts of gas, China is becoming a more flexible market given the scale of the new offtake agreements, increasingly able to “balance” global demand for LNG, Shell writes in an analysis.
The fact that energy costs in countries like Germany have not risen much more after Russia’s invasion of Ukraine and the stopped gas deliveries is mainly due to the fact that China imported 15 million tons less LNG during the pandemic and estimated 6 tons of excess gas to the highest bidder in Europe. China’s reduced liquefied gas imports made a “decisive” contribution to Europe being able to compensate for the lost deliveries of Russian pipeline gas through LNG, the International Energy Agency concluded in a report this week.
Now the hunger for energy is growing again in the Middle Kingdom. Chinese customers have signed 15 percent of all contracts in which gas supplies will begin in the next five years. This was calculated by the Bloomberg news agency. China will soon overtake Japan as the world’s largest LNG importer.
More savings needed
This could mean that Europe will not be able to get liquid gas as easily as it was last year. You get 30 to 40 ships with LNG cargoes a week, “but an economic recovery in China could reduce these exports sharply,” the president of the French energy supplier Engie had warned in September.
In its new baseline scenario, the International Energy Agency expects China to demand 94 billion cubic meters of LNG this year. That would be 10 percent more than in 2022. But the experts admit that they are groping in the dark. Because it could also be almost 120 billion cubic meters. The Energy Agency is therefore expressly calling on Europeans to save gas.
In their eyes, the 3 percent reduction in consumption caused by the accelerated expansion of renewable energies, the improved availability of French nuclear power plants and the continued strong generation of electricity from coal this year could prove to be insufficient. Should Russian pipeline gas supplies dry up completely and LNG be scarce on the world market, Europe would have to save 8 percent on gas to maintain security of supply.
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