China has just completed its first trade of liquefied natural gas (LNG) settled in yuan, the Shanghai Petroleum and Natural Gas Exchange said on Tuesday. As OilPrice notes, the Chinese state oil and gas giant CNOOC and TotalEnergies completed the first LNG trade on the exchange with settlement in the Chinese currency, the exchange said in a statement carried by Reuters.
The trade involved around 65,000 tons of LNG imported from the United Arab Emirates (because China will never admit that it is re-exporting Russian LNG even though it now does it all the time) the Shanghai Petroleum and Natural Gas Exchange added.
The French supermajor, one of the world’s top LNG traders, confirmed to Reuters that the trade involved LNG imported from the UAE, but declined to comment further on the deal.
France bought 65,000 tons of LNG using the Chinese yuan
The liquified natural gas was bought from the UAE, the payment is settled in the Shanghai Petroleum and Natural Gas Exchange, using Chinese yuan
We are witnessing the end of the US dollar hegemony. pic.twitter.com/GfX17nKxA1
— Zhao DaShuai 无条件爱国🇨🇳 (@zhao_dashuai) March 29, 2023
China has been looking for years to establish more trade deals in yuan to increase the relevance of the petroyuan (or LNG-yuan as the case may be) on the global markets and challenge the U.S. dollar’s dominance in international trade, including in energy trade. During a landmark visit to Riyadh in December, Chinese President Xi Jinping said that China and the Arab Gulf nations should use the Shanghai Petroleum and National Gas Exchange as a platform to carry out yuan settlement of oil and gas trades.
“China will continue to import large quantities of crude oil from GCC countries, expand imports of liquefied natural gas, strengthen cooperation in upstream oil and gas development, engineering services, storage, transportation and refining, and make full use of the Shanghai Petroleum and National Gas Exchange as a platform to carry out yuan settlement of oil and gas trade,” Xi said in December, as carried by Reuters.
Still, Beijing has a ways to go before it dethrones the greenback as the global reserves: while the Chinese currency has made inroads in global trade, the yuan accounts for just 2.7% of the market, compared to the U.S. dollar’s share of 41%.
On the other hand, China’s currency has lots of momentum: over the past year, Russia has turned to trade in yuan in the wake of the Western sanctions on its exports, imports, and energy trade, as the Chinese currency has become Putin’s only alternative to reduce exposure to the U.S. dollar and the euro.
Read More: France Buys 65,000 Tons Of LNG From China