SINGAPORE – Prices of liquefied natural gas (LNG) are levelling out in Asia thanks to a move by China to buy less on the global market and more from Russian sellers desperate to strike deals on the sidelines.

Russia is scrambling to sell energy exports like LNG and crude oil, given the sanctions imposed by many major markets in the wake of its invasion of Ukraine in late February.

China’s indifference to Western sanctions means it can easily take advantage of Moscow’s desperation to sell LNG at attractive and preferential discounted prices.

The deals it is making with Moscow means it does not have to compete with other buyers on the world market – especially Europeans rushing to build up LNG supplies before winter – and this is helping keep global prices capped.

Mr Toby Copson, global head of trading and advisory at Trident LNG, said Asia and Europe have benefited significantly from China’s lacklustre dealings in the LNG spot market.

“If they had been competing, prices would have been several magnitudes higher due to how tight the market has been,” he added.

China’s imports of Russian LNG hit 671,105 tonnes in August, close to a two-year high, official Chinese data noted on Tuesday.

Imports from Russia were also up 36.7 per cent from the same period in 2021 and 63.8 per cent ahead of July’s 409,682 tonnes.

Mr Copson added that China has been a crafty seller of LNG as well. “It has been selling contractual volumes from its portfolios and hedging those sales in effect with cheaper Russian supply at a discount, so commercially, it’s been a clever move.”

Mr Henning Gloystein, director of energy, climate and resources at Eurasia Group, said some of the Russian LNG cargoes bought by China at steep discounts could likely have been resold into the European market at higher prices.

Mr Ciaran Roe, global director of LNG at S&P Global Commodity Insights, said he expects China to expand its purchases of Russian LNG over the next few months.

“Recently, a larger number of short-term cargoes became available from Russia’s eastern LNG plant Sakhalin, and it is likely these cargoes will end up in China due to proximity and buying appetite,” he added, noting that the diminished pool of buyers is leading Moscow to offer considerable discounts.

The average LNG price for spot cargo being delivered in November to north-east Asia is estimated at US$45 to US$50 per million British thermal units, according to industry sources, markedly lower than October, when it is estimated to be around US$57 to US$60.