Coronavirus lockdowns in China give relief to Europe’s energy security concerns – Politico

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Chinese President Xi Jinping has some good news for Europe – his country’s tough anti-coronavirus policies are unlikely to be abandoned.

This is a relief to European LNG buyers, as the economic slowdown in China has freed up shipments of LNG necessary to replace Russian gas that was supplying about 40 percent of European demand.

“No matter what you think about the Chinese non-proliferation policy, just looking at it from the perspective of European gas supplies, it will be very helpful if China continues with this policy,” said Denis Hesling, head of gas at the EU Energy Unit. ACER regulator agency.

Xi took to the podium on Sunday to start the week-long 20th Communist Party Congress, and doubled down on his stance on the anti-coronavirus approach, Connection It is a “people’s war to stop the spread of the virus”.

The once-in-five-year summit is “mostly a political meeting within the party itself” but it sends important signals, said Jakob Gunther, a senior analyst at the China-focused think tank MERICS. So far this indicates that China plans to “stay with [zero-COVID] “For a while,” he said, adding that this is in part because the government’s epidemic messages have frightened the population that lifting them would lead to “chaos,” while hesitation about Chinese vaccines also remains high.

Since the outbreak of the epidemic in 2020, China has ruthlessly pursued its policy of eliminating the Corona virus, including sudden closures of entire cities accompanied by mass testing, monitoring and border closures. The slowdown in growth and lower demand reduced China’s imports of LNG by a fifth, or 14 billion cubic metres, on an annual basis during the first eight months of 2022, according to Jörg Woetke, president of the European Union Chamber of Commerce. China.

China and the European Union each imported about 80 million tons of LNG in 2021, but China’s imports will drop to 64 million tons this year, according to data from market intelligence firm ICIS. This helps the EU to buy gas from the global market and use it to fill the continent’s stores before the winter heating season.

“Europe is fortunate that China is experiencing a severe economic slowdown that will continue into 2023,” Wootke said, adding that the decline in demand from China – historically the world’s largest importer of LNG – roughly equals Britain’s total annual LNG imports. . “

2023 worries

Chinese President Xi Jinping | Anthony Wallace/Paul/AFP via Getty Images

With gas storage in the EU now More than 90 percent All in all, the talk in Brussels has already begun to shift to securing adequate supplies for next year. At the EU Energy Ministers Summit last week, International Energy Agency chief Fatih Birol warned That “next winter may be more difficult.”

Given the current situation, Beijing’s LNG imports are likely to rise to 2021 levels next year, according to ICIS gas analyst Tom Marzik Manser, with deliveries typically increasing in the winter season and likely to rise again next summer.

China already has Command State-owned gas importers have stopped reselling LNG to the European Union to maintain stocks for the winter season at home.

But if the no-coronavirus policy is repealed, it could lead to “a gradual change in growth again,” Marzek Manser said.

European countries are well aware of this danger.

in Power point Presented by ACER during last week’s informal energy council, ministers were told that “the COVID-induced decline in Chinese demand in LNG volumes is currently being absorbed” by the bloc. “This raises questions about when China’s demand for LNG may shift to normal growth rates,” she added.

Despite Russian shipments dropping to less than 9 percent of EU demand, some Kremlin gas is still in transit. But “that may not be available at all next year,” ACER’s Hesling said, adding that if there is no Russian gas and Chinese demand comes back again, more drastic energy-saving measures will be needed in the EU.

European Union leaders will meet later this week to discuss further measures to tackle rising energy prices in Europe, including measures for next year such as joint gas purchases.

According to a senior EU diplomat, “the competition is from Asia [is] He mentioned it constantly,” adding that it was “absolutely clear” that a change in Beijing’s lockdown policy “could raise global demand and raise prices.”

“China is already a competitor and everything we might do should be taken into account,” they said.

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