Essay by Eric Worrall
h/t resourceguy; Next time you pay your gas bill, the bill might be higher because of China’s geopolitical games. Only the election of pro fossil fuel Western governments can fix this situation.
China’s Taking Control of LNG as Global Demand Booms
Mon, February 20, 2023, 8:00 AM GMT+10
(Bloomberg) — A rush by China to sign new long-term liquefied natural gas deals promises to give the nation even more control over the global market at a time when competition for cargoes is booming.
Chinese companies are sealing the most LNG purchase agreements of any nation and increasingly are becoming the sector’s key import intermediary. The Chinese buyers are reselling many of the cargoes to the highest bidders in Europe and Asia, effectively taking charge over a hefty chunk of supply.
Firms based in China account for roughly 15% of all contracts that’ll begin delivering LNG supply through 2027, according to an analysis of BloombergNEF data. That trend is set to increase as the companies seek to lock in more long-term agreements, which will effectively give their traders control over the fuel for decades.
The Asian nation’s position in the market could be a double-edged sword: China can provide stability during periods of global shortages, but it could withhold supply and drive up prices if the needs at home must be met.https://finance.yahoo.com/news/china-taking-control-lng-global-220000960.html?guccounter=1
Thanks to the mindless Western pursuit of Net Zero, China is increasingly in a position to impose a China tax on the entire world’s energy supply, or keep the gas for themselves if they so choose.
If the Chinese plan is to insert themselves into the middle, to make a profit by reselling the gas, their positioning makes sense. Man in the middle, cornering the market then forcing up prices is an old trick, which only works when there is a limited supply of something people can’t live without.
The obvious counter strategy to China making themselves the natural gas brokers of the world, and potentially making a fat profit from everyone’s gas bills by pushing up the price, is to break China’s monopoly, by flooding Western markets with increased domestic gas production.
But my suggested counter strategy would require a rational Western political response to energy shortages.
After observing the energy policy insanity of the last decade, people operating out of China appear to have reasonably concluded that Western politicians will not respond intelligently to their geopolitical games, and have gambled their fortunes on Net Zero obsessed Western politicians maintaining their regulatory hostility to the expansion of Western domestic gas production.
If Western commitment to Net Zero falters, and Western gas production rises, international gas prices could fall below the strike price of those big Chinese futures contracts. The billions of dollars of profits the Chinese gas pirates and their associates expect to make from cornering the market would flip over into big losses (the brown area of the graph at the top of the page).
I doubt it is just Chinese entrepreneurs who are involved in cornering the gas supply market. Chinese entities might have purchased the gas futures contracts, but who owns those Chinese entities? Who is on the boards of directors? Who provided the money? Who is receiving a share of the profits?
We have no way of knowing for sure who is involved. And it is worth noting, cornering the global gas market by purchasing gas futures is not against the law, so I am not accusing anyone of committing a crime. Lets just say I would not be surprised if some rich and influential Westerners are involved, in this entirely legal scheme, which I believe is aimed at ripping off ordinary Western energy consumers.
It is hardly a gamble. You would be hard pressed to find a politician in Australia who does not believe that the world can be powered from the wind and sun. It is only obstinate dimwits like Trump who does not understand W&S energy is free for the taking.
The greatest threat is if the Greens in Australia prevent gas exports. So there is sovereign risk but eventually beggars cannot be choosers. If you want windmills and electric cars, China needs your iron ore, coal and gas. China will also take all your filthy uranium.
“Only the election of pro fossil fuel Western governments can fix this situation.”
There is nothing unusual about speculating in commodities, as is going on here. The clear remedy is, don’t sign those contracts. If you must give someone an option, make sure you get a fair price.
Down-vote for poor reading comprehension – not signing some contract is no protection from high gas prices caused by anti-production policies and supply being bought up by speculators.
What contracts are you talking about?
“What contracts are you talking about?”
The title of this post is
“China is Locking Up Future Natural Gas Supplies”
From the lede of the quote
“ A rush by China to sign new long-term liquefied natural gas deals promises to give the nation even more control over the global market”
Nick, I believe you are correct about the normal process of speculating about commodity futures. However, the report is about the associated activities to force the price of LNG up, and appears to involve both the CCP and “…rich and influential Westerners…”, like maybe 10% for the “big guy”. Here is a pending clarification of the process of speculating in commodities and illegal influence: the House Oversight Committee reports that long-time Biden family financial manager, Eric Schwerin, will flip and provide the committee with documents showing how the Biden family gained millions of dollars from groups backed by the CCP during Joe Bidens time as VP and President. Maybe you should wait for the result before attaching yourself to a Crime Family and the CCP?
Now that I have your attention, Nick, please explain why one meter of modelled sea level rise is anthropogenic when the normal sea level variance is 40 meters higher and 140 meters lower than current? Thank you, Ron.
It looks like Nick stokes has left the building, right behind Elvis Presly.
I believe China already owns large parts of Australian infrastructure so Nick has to be careful with what he says 🙂
What might be a fair price today may not be a fair price next year. That is why it is called speculating.
Net Zero sums up western thinking
Empty virtue signalling
Justin Trudeau’s IQ
He has a measurable IQ?
A very pertinent discussion about the price of gas , which also applies to oil and other “fossil fuel” resources.
However, not even mentioning the existence of what is basically WWIII, unprecedented economic sanctions on Russia , FORCING it to find other markets for it gas and oil, as USA destroys the economic viability of its vasal state “allies” in Europe is nothing short of stupid and disingenuous.
Then you may want to ask yourself if the criminal sabotage of NS1 and NS2 by US forces may have an influence on who ends up buying Russian gas.
Trump got elected in 2016 on a policy of making closer economic ties to Russia. Before he even got elected, the RussiaGate hoax went into motion to destroy any chance of closer relations with Russia. The resulting policy is what has forced the worlds largest nuclear power to align itself with the US’s largest economic rival.
That is without doubt the most stupid political miscalculation of this century. Maybe the close ties of Biden Inc. to the CCP helped put this into place.
Writing an article pretending this is just a result of “net zero” or “because of China’s geopolitical games” is laughable.
Putin stole parts of Ukraine back in 2014 when Biden was Vice President, and Biden and Obama did nothing about it except send blankets to Ukraine.
Biden abandoned Afghanistan and threw millions of innocent people there to the wolves.
Putin decided this was a good time to steal more land from Ukraine.
Putin ran into a buzzsaw in Ukraine, getting tens of thousands of his troops killed and wounded, and showing his army to be a paper tiger.
The war will end when Putin is removed from power by his own people.
US state department stole Ukraine from the democratically elected govt in 2014 when they fomented an armed coup d’etat which removed the democratically elected president. Your version of history seems to start just after that event. I wonder why that is.
US thought it had sufficient global hegemony to force everyone isolate RF and destroy it economically. That ran into the buzz-saw political reality showing US global dominance to be a paper tiger.
All that has been achieved so far is the economic destruction of Europe, the total destruction of any semblance of democracy in Ukraine and the loss of over 100,000 the same Ukrainians we pretend to so concerned about “saving”.
Time to wake up and smell the coffee Tom.
So much paranoia, so little actual data.
If you want to know what’s really going on in Ukraine, you should listen to former U.S. General, Jack Keane. That’s who I listen to.
Keane thinks Putin is the bad guy. So do I. And I didn’t need Keane to tell me that. It’s obvious Putin is a murderous dictator with no regard for human life, and with a very big ambition.
Now we are going to see whether the bad guys, the Axis of Evil, of the world, prevail or not.
The only way they prevail is if the good guys are too weak and ineffective. That remains to be seen. There are a lot of Nervous Nellie’s in the West who are letting fear rule their common sense.
Putin and the Bad Guys see this hesitancy and it emboldens them. Don’t embolden the Bad Guys. It gets innocent people killed and prolongs conflicts.
Some questions for you, Tom:
‘Has Russia threatened the U.S.? No. What grave acts has the Russian military committed against the U.S.? None. What is Biden’s objective? He won’t say.’
Waiting until the enemy has destroyed all potential allies and has is sites set on you is not a good strategy.
I wouldn’t hold my breath waiting for the arrival of the Russian Armada. But if it does, you can thank Biden and his neo-con friends for pushing Russia into the arms of the one country that could probably build it.
Not a good strategy to misspell and thereby change meaning.
Well, Putin does business with the Chicoms and the Mad Mullahs of Iran in an alliance against the United States that are not friendly acts.
Biden’s objective is to do as little as possible to help Ukraine. He’s slow-walking every improvement in Ukraine’s armaments.
The main objective of the “West”, which Biden reluctantly follows, is to stop Putin from taking Ukraine and then going beyond Ukraine as Putin has threatened to do.
Stop Putin now, or have the task of stopping Putin later. After he has been victorious in Urkaine and his ego has been fed. Putin and his fellow travelers, the Chicoms, the Mad Mullahs and North Korea’s Kim Jung-un, the “Axis of Evil”, will be greatly emboldened to commit more murderous actions around the world if Putin succeeds.
Do you have any evidence of this, or are you just one of those people who automatically assume that if it’s bad, the US is behind it?
Biden said he’d get rid of it.
If you look at the situation objectively, there is only one reasonable answer.
You might not like it, I certainly don’t like it, but here we are.
You are misinterpreting what Biden said.
At present this Chinese “threat” is not a threat at all to most US consumers. The natural gas market in the US is currently flooded with gas caused by a combination of a warm winter, heavy drilling in Texas and a loss of LNG export capacity from an accident at the Freeport LNG facility. The FERC may be able to block gas drilling in Appalachia by blocking pipeline permits to cross state lines into export markets in the NE, but it can’t block drilling in Texas because it has no jurisdiction over intrastate pipelines carrying gas to the LNG plants on the Gulf of Mexico and because their is very little Federal acreage in Texas. US gas in storage is currently 300 BCF over the 5 year average. So for now enjoy cheaper heating bills and cheaper electricity this summer. China’s locking up of seaborne LNG may become a problem for US consumers some day but as it stands today natural gas is plentiful and dirt cheap in the US.
I’m thankful for natural gas, the cheaper the better as it’s as cold as ever here in Colorado and has been all winter.
Henry Hub around $2.24 …
weather across northern US hasn’t hit gas price …yet.
Hope it has minimal effect .
“So for now enjoy cheaper heating bills and cheaper electricity this summer.”
Something drove my electric bill up about 20 percent last month as compared to last year. I suspect it is because of higher prices being paid for natural gas by my electric utility.
What a strange thing for the Chinese to be doing.
Because as everyone in Europe *knows*, Europe being the centre of the universe, birthplace of science, art, music, renaissance and the home to the oldest established universities anywhere..
Europe is where The Brightest People evah habituate.
And that that place and those people *know* that The Spot Market is the best place to get your fuel supplies. Contracts and deals any more than 7 days in advance are soooo old fashioned and passe.
Hence why Europe is such an epic shining star of genius, intelligence, science, industry and commerce and An Example To Us All
‘scuse me now, am just popping down Tesco to get some tomatoes.
<returns minutes later. stony faced. empty handed. says nowt>
I remember the Hunt brothers tying up silver in the early 80’s – they lost
I too recall the doomsday oil scenario & ‘peak oil’ & the Simon v Ehrlich wager – yep, none turned out with the Malthusian side winning
CCP supported business enterprises making sound bets predicting future scarcity by trying for monopoly? I remain skeptical
From the article: “If Western commitment to Net Zero falters, and Western gas production rises, international gas prices could fall below the strike price of those big Chinese futures contracts. The billions of dollars of profits the Chinese gas pirates and their associates expect to make from cornering the market would flip over into big losses (the brown area of the graph at the top of the page).”
That would be too bad, wouldn’t it. 🙂
If elected president, Trump would increase natural gas production, as would probably all the other Republican presidential candidates. Xi definitely doesn’t want a Republican elected president in 2024.
Maybe Xi will take a hand as he has done so here in canada
Not a great article. China needs energy – why would they not lock up natural gas supply given the spike of LNG prices arising from the Ukraine conflict, subsequent sanctions and the US plus Norway destruction of the Nord Stream pipelines?
Nor is it clear why it is bad for China or Chinese companies to resell natural gas if they get a sufficiently high price – which occurred last year as the EU spent something like a trillion dollars buying energy of all sorts but primarily LNG.
China also happens to be the largest LNG importer as of 2021: https://www.eia.gov/todayinenergy/detail.php?id=52258
Do you have any evidence that the US was behind the Nord Stream bombing? It makes just as much sense for Russia to have done it.
The value of the propaganda, the usual fools leaping to conclusions is worth many times more than the small cost of repairing a pipeline that wasn’t in use anyway.
Your reasoning is extremely bad. Russia benefits from the Nord Stream pipelines – direct sales in Nord Stream 1 and potential future sales from Nord Stream 2. Even if the EU decides to not buy, the pipelines are always there if/when they change their mind.
Equally, Russia could stop pumping natural gas any time they chose – why exactly do they need to blow their 51% owned pipeline up? (The other 49% is owned by European countries/companies)
As for other evidence: Seymour Hersh has published a Substack documenting an insider(s) very detailed story of how Biden, Sullivan, Nuland and Blinken ordered up a plan to destroy Nord Stream then ordered said plan executed. Hersh has been exposing such schemes for 50 years from My Lai to CIA shenanigans leading to the Church committee to Abu Ghraib etc etc.
The usual fools comment seems to be a self description, Mark.
The rush by China in all areas of energy, industrial, and tech development would make our dear leaders heads spin–if they had any brains to spin.
Add U.S. oil to the Chinese buying spree list. I guess Biden will be happy to see it gone in the NIMBY, Net Zero march.
Why Is China Buying Up So Much U.S. Oil? (yahoo.com)
15%, imagine that, for a country with 18% of the world population. Imagine that!
Until recently they have been buying coal and building coal power plants. Is there any evidence that China is shifting away from coal and towards natural gas?
Just when all the green pundits had net zero figured out, the apple cart is being tipped over again–India is waking up economically and has a bigger energy need than China. This is going to be big if it pans out this time.
As India Shakes Off Shackles, It Emerges as Global Economic PowerNew infrastructure, regulatory reforms and digitization buttress its strengthBy Greg Ip
Buy gas from Russia on the cheap and sell it to the EU at windfall prices
Illegal for western traders but legal for China.