China has inked a deal for Russian natural gas at half price through the end of this year.
The deal comes as Europe faces a near total cutoff from Russian gas supplies as winter nears.
Dutch TTF futures soared 28% after Russia announced an indefinite halt of Nord Stream 1 this week.
China continues to ramp up imports of Russian natural gas, recently securing a deal for supplies from the Sakhalin 2 operator at a 50% discount until the end of the year, according to a report from Bloomberg.
China imported 29% more Russian liquefied natural gas in the first half of the year than in 2021, and imports soared to their highest level since 2020 in August, according to Bloomberg data. That's cemented its spot as one of Russia's largest energy customers since the invasion of Ukraine, snapping up crude and natural gas at hefty discounts while the West attempts to pull back from the consumption of Russian energy commodities.
China's appetite for Russian energy isn't showing signs of ebbing, as the country has recently struck a deal with Russia's Sakhalin-2 LNG plant to purchase natural gas supplies at half the current spot price, traders familiar with the matter told Bloomberg on Wednesday.
The deal complicates matters overseas, where Europe faces a looming energy crisis that could be worsened by a potential shutoff from Russian gas this winter. China snapping up Russian gas means less competition on the spot market for European and Asian suppliers, but they'll shoulder the cost of more expensive alternative supplies.
And Europe has already suffered from soaring energy prices. Dutch TTF futures, the European benchmark for natural gas, recently soared 28% after Russia announced an indefinite shutoff of the key Nord Stream 1 pipeline, up to 268 euros per megawatt hour.
It's also affected consumers' electricity bills, as power is generated from natural gas. And German baseload power, the European benchmark for electricity, has skyrocketed to more than 1,400% above the average in the previous decade, breaking 700 euros per megawatt hour for the first time in August.
It gives a glimpse of the difficult winter ahead, the one upside being that China has been reselling its natural gas surplus to Europe ahead of winter. Already, 4 million tonnes of LNG have been passed off to the energy-strapped continent, largely due to decreased demand in China from its continued lockdown restrictions.
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