CNOOC to Increase Purchases of LNG Cargoes Amid Rising Demand

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Chinese oil giant CNOOC [CEO:US] has purchased over ten LNG cargoes amid rising demand fueled by the strong economic rebound in recent months, as reported by Reuters on June 9. Specifically, CNOOC purchased between 12 and 15 cargoes scheduled for delivery between July and March 2022. Sources familiar with the matter stated that cargo scheduled for delivery was sold at an estimated USD10.70 to USD10.80 per million British thermal units (mmBtu), while winter cargoes were awarded at a discount price. CNOOC has declined to comment on the matter.

The move comes amid high spot LNG prices that have doubled since early March amid rising demand across the mainland. In March, Guangdong authorities ordered numerous factories to reduce power consumption by partially suspending operations due to a strained power system. In April, power consumption in Guangdong surged 22.6% compared to the same period in 2020 and 7.6% compared to 2019. Recently, the Shandong provincial energy administration stated that some southern China provinces were experiencing tight gas supply at their power plants due to a surge in demand. The administration further stated that CNPC, Sinopec [SNP:US], and CNOOC recently signed contracts with Shandong for the supply of 22.2bn bcm for 2021, up 9.4% YoY.

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