China urges gas importers to secure supplies at any cost to avoid energy crunch this winter

With the world grappling with an energy crisis amid the post-pandemic recovery, China has urged its liquefied natural gas (LNG) importers to secure enough fuel before winter, Bloomberg reports, citing its sources.

According to traders with knowledge of the matter, it is difficult for the nation’s smaller gas distributors to meet the request because the government isn’t providing enough subsidies for purchases.

The large state-owned companies are ready to pay high spot prices to attract shipments away from rivals in Asia and Europe despite the extreme losses they could be facing. To compare, a single LNG spot cargo that cost about $17 million last year is currently priced at more than $130 million.

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Asia is winning the bidding war for natural gas supply

Traders also say some LNG importers have struggled to secure additional loans from banks to make purchases. According to them, at least two second-tier companies, including Shenzhen Energy Group, have decided against purchasing shipments despite government orders.

Meanwhile, the China Banking and Insurance Regulatory Commission said on Tuesday that banks and other financial institutions should prioritize lending to qualified mines and power plants so that they could increase thermal coal and electricity output.

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Gas price in Europe soars above $1,900 per 1,000 cubic meters

North Asian LNG spot prices surged to a record high this week as importers intensified competition for the super-chilled fuel amid low inventories and coal shortages. Importers are trying to avoid a recurrence of last winter's scramble for cargoes by purchasing volumes much earlier in advance. Gains in Asian LNG spot prices have also been driven by an unprecedented rally in European gas prices, which reached record levels on Wednesday.

Experts say new records are expected to be set in the coming weeks and months.

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