China National Offshore Oil Corp. (CNOOC) has resold a liquefied natural gas (LNG) cargo floating offshore South Korea, according to data from Refinitiv Eikon and three industry sources, highlighting the drop in winter gas demand in China.
The move is a departure from the 2017-18 winter, when China was desperate to procure LNG to meet demand for the super-chilled fuel amid a spike in natural gas consumption following a government-mandated switch from coal to gas for residential heating and industrial processes.
In 2017, CNOOC spent $10 million to lease two LNG tankers, including one called the Neo Energy, as an emergency stash of the fuel for unloading at the company’s receiving terminals at Tianjin in northern China and Ningbo on the east coast.
Now, CNOOC has sold a cargo on the Neo Energy, which was loaded onto the ship on Nov. 15 from the Bontang liquefaction plant in Indonesia, one of the sources, with direct knowledge of the move, said on Monday.
On Sunday, CNOOC redirected the Neo Energy to Tokyo from the Okpo anchorage in South Korea, the Eikon data showed. The vessel, currently fully laden, can hold about 150,000 cubic meters of LNG. Details of the buyer were not immediately clear.
“The whole idea of leasing Neo Energy was to cope with spikes in winter demand but now it seems there is less such need,” the source added, who asked not to be identified as he is not authorized to speak with the media.
CNOOC could not immediately be reached for comment.
Last winter’s gas shortages prompted Chinese companies this winter to secure supply ahead of time and pushed LNG imports to a record monthly high in December.
But temperatures have been higher than normal this winter and weather data from Refinitiv Eikon forecasts warmer-than-usual temperatures ahead, leaving suppliers with high inventories.
Chinese buyers do not typically resell LNG cargoes during winter, highlighting the country’s reduced appetite for the fuel, said a second source, who is involved in LNG shipping.
Companies were under pressure to remove the surplus LNG cargoes because of the supply and demand imbalance this winter, likely resulting in losses from the sales because of flat domestic gas prices, said the first source.
An LNG distributor based in the northern Chinese city of Tangshan, the country’s biggest steel producing city, said Monday that industrial LNG demand has been flat this winter as users such as steel mills have curbed output to meet air pollution reduction targets.
Ex-terminal LNG prices for the Tangshan region are at 5,050 yuan to 5,100 yuan ($751) per tonne, little changed from the start of the heating season in November, the operator said.