China's CNOOC plans LNG sale on Shanghai gas exchange next week

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2018-04-12 11:26:43

Reuters

China National Offshore Oil Corp (CNOOC) will next week auction one or two cargoes of liquefied natural gas (LNG) for delivery later in the year on the Shanghai Petroleum and Gas Exchange, the state-controlled company's first such deal.

The move comes as China aims to increase the availability of cleaner fuels and give factories that use the fuel a chance to lock in prices ahead of the winter heating season as the government aims to wean the nation off coal to reduce air pollution.

Natural gas shortages this winter caused chaos, cutting off supplies to industrial users and causing big spikes in prices.

An official at CNOOC familiar with the plan said it is the first time the company has agreed to do a forward sale of LNG on the exchange.

The cargoes will be delivered from the Ningbo terminal in Zhejiang province, the exchange said.

Trading volumes on the Shanghai exchange, which was launched in early 2015 were pretty thin in the first two years, but they picked up late last year ahead of the severe gas crunch this past winter.

It is backed by state news agency Xinhua; China's top three state oil majors Sinopec, China National Petroleum Corp (CNPC) and CNOOC; and five gas distributors, including China Gas Holdings, ENN Group and state-run utility Huaneng Group.