Major Chinese liquefied natural gas importer cautiously eyeing to buy additional Russian shipments that have been rejected by the market in a bid to take advantage of discounted prices.
Chinese state-owned companies including Sinopec and PetroChina, are in talks with suppliers to buy spot cargoes from Russia at a deep discount, according to Bloomberg citing people familiar with the matter.
Reportedly some importers are considering using Russian registered companies on their behalf to bid for LNG in an attempt to hider their purchases from foreign governments, Bloomberg said citing people familiar with the matter.
Chinese companies are avoiding involvement with satellite offices from London to Singapore to avoid potential issue with those governments of the respective countries.
Due to coming in foul with the sanctions and fear of repetitional damage, international bidders are shying away from Russian oil and gas.
Meanwhile, Chinese and Indian companies are also snapping Russian Ural grade crude at a discounted rate. Chinese importers have already bought several LNG shipments in recent weeks, traders said.
According to Bloomberg, Russian LNG is trading at a discount of more than 10% compared to normal North American shipments in the spot market.
Although China current is not in need for LNG to meet demand, however it is looking towards filling up storage tanks at a deep discounted price.
In terms of payments, smaller Chinese companies are struggling to get credit guarantees from banks for Russian cargoes while most institutions in Singapore are unwilling to provide banking support. Only major importers are using so-called open credit schemes which are credit lines pre-approved by banks.