China has bought up LNG...Two important themes emerged after reviewing the past 18 years of transactions
 

 
Chinese President Xi Jinping's recent move to approach Ukraine and seek to act as a neutral mediator over a peace deal between Russia and Ukraine has rocked the diplomatic landscape. China has strongly denied reports that it had been informed in advance of Russia's plans to invade Ukraine and that it had asked Russia to postpone the attack until after the Beijing Winter Olympics.
However, questions remain as to what China knew and whether it used that information to support Russia's agenda. This suspicion may be well-founded given the strategic interests shared by the two authoritarian powers of Eurasia. A successful Russian conquest of Ukraine would set a strong precedent for China to use force against Taiwan.
The authors obtained data from China's energy deals to support these suspicions, examining more than 600 global purchases of liquefied natural gas (LNG) over the past 18 years. This quantitative indicator details China's attitude before and after the invasion of Ukraine. Two important themes emerged that had not been publicly discussed before.
First, LNG purchases by Chinese companies have been prominent in the six months before the Russian invasion. From September 1, 2021 until the end of February 2022, when Russia invaded Ukraine, Chinese companies including the state-owned China National Offshore Oil Corporation (CNOOC), China Petroleum and Chemical Corporation (Sinopec) and China Sinochem (Sinochem) Eleven companies accounted for more than 91% of global LNG purchases on long-term contracts (usually four years or more).
Even after the war began, Chinese companies continued to add contracts, reaching 57% of global long-term contract purchases of LNG by April 2022, when other countries began scrambling for sources. Combined with multiple contracts signed during the seven months from September 1, 2021 to April 1, 2022, annual LNG purchases exceed 23 million tons. That's more than double the amount purchased in the previous calendar year. Between 2006 and 2020, the country's new procurement volume averaged about 5 million tons a year, or only about 15% of the global total.
China's LNG purchases in the six months before Ukraine's invasion consisted of 22 contracts by 11 companies, all but one of which are owned by state or local governments. In addition, nine of the 20 Chinese companies included in the data appear to have had no LNG contracts prior to September 2021, and some have reportedly closed in the fourth quarter of 2021 when China monopolized global LNG procurement. Some companies have concluded contracts only for This pre-invasion hoarding went unnoticed due to the low volume of individual cases, but together they robbed the market of most of what could be procured in the short term.
Gazprom cuts supply
Second, China's monopoly is sucking up short-term LNG supplies. Contracts signed by Chinese companies with suppliers in the United States, Qatar and Russia (90% of the total transaction volume during the relevant period) are scheduled to start supply within one to two years. Prior to that, most of the new LNG projects contracted by Chinese companies were three to five years away.
The background is what matters. Russian state-owned Gazprom cut gas supplies to Europe in 2021 as China's hoarding of LNG has wiped out short-term supply of LNG. The company, which accounts for about 25% of Europe's gas reserves, had nearly zero storage in the region in the winter of 2021-2022.
When the Russian invasion began in late February 2022, Gazprom threatened to cut off natural gas supplies to Europe. And indeed, almost all of Europe's natural gas supply via Russian pipelines, which accounted for up to about 40%, has stopped.
Europe responded to Russia's energy blackmail by promoting savings and fuel conversion, importing 74% of the LNG exported by the United States between January and April 2022. But the price of natural gas and electricity skyrocketed, and Europe paid a heavy price.
Long-term harm to Europe
This issue is ongoing and has great strategic implications. In late 2021 and early 2022, China directed state-owned gas importers to buy up LNG. That was about 60% of the pre-war supply of Nord Stream 1, a pipeline that carries natural gas from Russia through the Baltic Sea.
If interpreted in a favorable light to China, it is possible that they bought up at the timing when Chinese politicians and companies predicted that the price of natural gas and LNG destined for Europe would soar. However, some of the world's leading commodities trading firms and elite LNG traders, who reacted little to the September 2021-February 2022 market opportunity, have become the main drivers of LNG contracting since the start of the invasion. Given that, the explanation that China was a good trader seems to fade.
There is also a view that Chinese buyers have moved to secure additional energy supplies in anticipation of the lifting of the lockdown (city blockade) against the new coronavirus in China. However, China's zero-corona policy lasted for another year and was abruptly lifted after large-scale protests in November and December 2022, so it is hard to say that it was planned.
Alternatively, China will meet its obligation to purchase $50 billion worth of energy products by the end of December 2021, when the Phase 1 economic and trade agreement signed by the United States and China in January 2020 expires. I may have. However, although the agreement called for the purchase of American products in a wide range of fields and revisions to laws aimed at protecting intellectual property rights, China implemented almost none.
China has decided to switch from coal to natural gas at the end of the summer of 2021, in line with global climate goals and its own commitments at the 26th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP26).
Is it possible that Even if that is the case, they soon changed course. According to China's Ministry of Ecology and Environment's 2010 "China Environmental Report," new construction of coal-fired power plants and coal mines was approved. bottom. Furthermore, at the Chinese Communist Party Congress in October 2010, Xi declared that energy security should be given top priority over climate change countermeasures.
China has maintained a neutral stance on Ukraine while promoting pro-Russian propaganda at home. But if China knew war was imminent and bought up LNG to give Europe a direct long-term strategic disadvantage, then China is nothing more than an ally of Russia.

The original article (Japanese)