Europe has found an unexpected (and unwitting) ally in its gas crisis: China

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Gas has become an economic weapon. Europe needs it and Russia sells it, but the rest of the powers also have a lot to say. United States and qatar They have made gold with this crisis, but there is another important player who can change the outlook for the coming months.

China begins to sell gas to the rest. The situation of the Asian giant has changed. It is still a market with huge consumption, but demand has fallen due to its strict policy with Covid. This contrasts with a Europe that is already beginning to leave the pandemic behind.

as described BloombergChinese energy companies have begun to offer liquefied natural gas to third countries, including cargo ships to Australia and to US companies, which have subsequently ended up in Europe.

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A strong counterweight to high prices. China has gone from being the largest buyer of gas to its domestic demand falling by 20%. It would not have such an impact if it had coincided in time when the rest of the countries were also confined, but now while some require more energy, China does not have as much activity.

The fact that China is selling gas will help moderate the rise in prices, at least until the end of the year, when the Chinese authorities hope to carry out strong stimuli to its economy to relaunch the country. In this “race” between the reactivation of Chinese demand and Russia’s access to gas lies a large part of Europe’s concerns regarding the price of gas.

Putin’s hand is still behind the gas market. China sells gas (LNG), but it is also receiving it (via pipeline) in large quantities from Russia. Putin has announced that he will start selling gas in rubles instead of euros and that will enhance its link with China with the future Power of Siberia 2 gas pipeline. A strategy that contrasts with the closure of Nord Stream 1.

More money is moving than ever. Whether through China, through its LNG exports to Spain or managing direct shipments to Europe, the truth is that Russia has managed to get the gas flowing and can make record profits from the sale of gas. Up to 154,000 million euros since the beginning of the invasion of Ukraine, according to the CREA study center. Considerably more than the almost 100,000 million that the war in Ukraine would cost, between the conflict itself and the impact of the sanctions.

The price of gas begins to collapse: Europe has done its homework in time for a harsh autumn

Russian gas in disguise. Europe wants to avoid buying Russian gas, but has ended up acquiring it by other means. In fact, adding intermediaries has also contributed to the fact that the price being paid ends up being higher. There is no easy solution, but it is relevant to observe the needs of each country.

Europe has needed gas this summer due to high activity and the strong heat wave. We’ll see what happens at the end of the year. Perhaps it is a mild winter and China is in full recovery. Or maybe the opposite. Based on this, the gas crisis will pull to one side or the other.

Gas has become an economic weapon. Europe needs it and Russia sells it, but the rest of the powers also…

Gas has become an economic weapon. Europe needs it and Russia sells it, but the rest of the powers also…

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