China’s biggest oil refiner Sinopec Group has been unloading excess liquefied natural gas to European clients, the company said Thursday, in transactions that appear to run counter to China’s objections to Russian sanctions.
Sinopec’s Hong Kong-listed subsidiary confirmed during a first quarter earnings call that it is reselling part of its LNG stockpile on the “international market” in commenting on sales to Europe.
“These are pure market transactions,” said a Sinopec representative. “We are trading LNG on a global scale based on commercialization and diversification principles,” the representative added, denying any political implications to the trades.
The Chinese government is expanding the use of natural gas as it combats air pollution. Last year, about 40% of China’s domestic natural gas consumption came from imports.
LNG made up about two-thirds of natural gas imports, and roughly half of that came from Australia and the U.S.
Sinopec is apparently reselling some of the imported LNG to Europe in part because domestic use of the fuel has come down from winter’s peak. The soaring prices of LNG seemed to have encouraged the resale.
Beijing has indicated that it will not join Western nations’ sanctions against Russia over its invasion of Ukraine. China is also expanding imports of natural gas from its northern neighbor. Western media has reported that Shell has started talks with Chinese oil companies on selling its interest in the Sakhalin-2 LNG project in Russia’s Far East.
Meanwhile, Sinopec suspended talks with a Russian petrochemical company over forming a joint venture, according to a Reuters report. Given that China’s information technology and automotive sectors rely on U.S. and European supplies and markets, Beijing wants to avoid further antagonizing Western nations.
Formally known as China Petroleum & Chemical Corp., Sinopec earned a net profit of 23.3 billion yuan ($3.5 billion) in the first quarter. The bottom line jumped 24% from the year-earlier quarter. Sales rocketed 34% to 771.3 billion yuan.
Source: Nikkei Asia