By Chen Aizhu, Emily Chow and Marwa Rashad
SINGAPORE/LONDON, Nov 10 (Reuters) - China, the world's top importer of liquefied natural gas (LNG), is increasingly re-selling some of the super-chilled fuel to other Asian buyers as it looks to profit from price swings.
Armed with a growing portfolio of long-term supply deals recently struck with Qatar and U.S. exporters, as well as extensive terminal capacity, Chinese companies led by state giant PetroChina are more actively trading LNG, but still lag far behind global majors such as BP, Shell and TotalEnergies.
Chinese customs data shows that China reloaded 617,000 metric tons of imported LNG during the first nine months of this year, compared with 576,000 tons in all of 2022, 26,000 tons in 2021 and 59,000 tons in 2020.
China's LNG sales have increased along with rising Asian demand after the disruption in Russian exports to Europe from the Ukraine war sparked price volatility and tightened supplies globally.
Asia spot prices soared to record highs of $70 per million British thermal units (mmBtu) last year. They have since eased to $17/mmBtu, encouraging demand from Asian buyers, but are still above single-digit levels seen before Russia's invasion of Ukraine and the COVID-19 pandemic. LNG-AS
Top Chinese LNG trader PetroChina International (PCI) is spearheading the retrading, which is recorded by Chinese customs as exports from bonded storage tanks.
South Korea has been the top buyer so far this year, taking 27% of China's reloads, followed by Thailand, Bangladesh, and Japan, as well as Kuwait, Chinese customs data showed.
"We need to pull all levers when it comes to managing market swings," Zhang Yaoyu, PCI's global head of LNG, told Reuters.
Re-selling LNG cargoes is one initiative among others - such as using financial derivatives products and developing infrastructure like regasification terminals and underground storage - to offset market volatility and improve overall supply security, he said.
Still, the trading volume is a small fraction of PCI's supply portfolio, and fluctuates depending on market conditions, Zhang added.
While Qatari contracts carry rigid destination clauses, most U.S. supplies and some purchases from global portfolio players are tradeable.
China also receives some LNG from Australia and Indonesia with flexible destination clauses.
HAINAN ISLAND HUB
State trader CNOOC and privately controlled Jovo Energy also re-exported a cargo each this year, both to Japan, Kpler data shows.
The main reloading point has been the Yangpu regasification terminal, in the southern island province of Hainan, which can handle 3 million tons of LNG annually and is closer to southeast and south Asian buyers than China's east coast terminals, according to Kpler and ICIS.
Chinese LNG buyers have also been setting up or expanding trading desks in London and Singapore to better manage their supply portfolios.
China is now the world's second largest LNG re-exporter after Spain, which exported 1.7 million tons in 2022 and 1.15 million tons so far in 2023, Kpler data showed.
"This could lead to it taking up a similar role in Asia to one that Spain has had in Europe... as a key centre for reloading cargoes, helping to offer flexibility to the market," said ICIS LNG analyst Alex Froley.
China's LNG receiving capacity is expected to expand 30% to nearly 182 million tons annually by 2025 from 139 million tons this year, CNOOC has estimated.
China's LNG exports 2022-2023 updated https://tmsnrt.rs/3MAcQTI
(Reporting by Chen Aizhu and Emily Chow in Singapore and Marwa Rashad in London; Editing by Tony Munroe, Florence Tan and Kim Coghill)
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