China buys rare LNG cargo from Norway

China has bought a rare cargo of liquefied natural gas (LNG) from Norway, Reuters shipping data shows, the latest sign that the world's second-largest economy has rushed to increase spot purchases to ensure fuel supplies ahead of the coming winter. Trade flow data on Thomson Reuters Eikon shows LNG tanker Grace Cosmos, with a cargo of 143,625 cubic metres loaded in Melkoya, Norway, heading to China for delivery on October 30.
It is the first LNG cargo China has bought from Norway since December last year and one of only six in the past 3-1/2 years. Melkoya serves the Snohvit LNG terminal operated by Statoil. While only a small portion of the billions of cubic metres China imports each year, the deal represents a growing need as Beijing intensifies its war on the choking smog that shrouds the north of the country.
This winter, China will use natural gas to heat millions of homes across the north for the first time, as the government tries to wean the nation off its favourite fuel, coal. That effort will add an estimated 10 billion cubic metres (bcm) to China's gas demand, about 5 percent of its consumption last year and equivalent to Vietnam's annual use. Concerns about sufficient supplies for such an ambitious project have grown, said a gas researcher from an energy think tank run by China National Petroleum Co (CNPC), the country's top oil and gas group and a major importer.
"We should see more buying on the spot market with more consumption coming from north China," the researcher said. China bought 22.1 million tonnes, equivalent to 30 bcm, of foreign LNG in the first eight months of the year, up 44 percent from a year ago. Almost half of that came from Australia followed by Qatar.
Data showing September natural gas imports will be released on Friday morning. An increase in spot buying may give Asian LNG spot prices further upward momentum. They are currently at $8.50 per million British thermal units (mmBtu), their highest since mid-January.
A source at China National Offshore Oil Corp, China's biggest LNG importer, said the company has bought more spot cargoes this year because they are cheaper than domestic natural gas production. Some of CNOOC's term cargoes were resold this year but this was not essential because demand has been solid, the source said. Other Chinese oil majors, including state-owned refiner Sinopec, resold term LNG supplies or renegotiated deals due to strong competition from cheaper spot supplies.