Recently, China completed its first purchase of liquefied natural gas (LNG) using cross-border yuan settlement. It comes amid the rising acceptance of the yuan in the international market.
The news came after China National Offshore Oil Corporation (CNOOC), the largest offshore oil and gas producer in China, purchased a shipment of LNG from TotalEnergies through Shanghai Petroleum and Natural Gas Exchange (SHPGX).
Approximately 65,000 tonnes of LNG imported from the United Arab Emirates changed hands in the trade, it said in a statement. The move is quoted as “a major event in China’s market-oriented oil and gas reform.”
Guo Xu, chairman of SHPGX said the deal, which marks the first international LNG transaction settled in yuan, is a meaningful attempt to promote multi-currency pricing, settlement and cross-border payment in international LNG trading.
Meanwhile, Yu Jin, deputy general manager of CNOOC, commented that the yuan settlement could promote energy trade globalization and build a diversified ecosystem for LNG trading.
“In the future, CNOOC will continue to promote innovation in the international LNG trade business model,” Yu said.
Although the data showed that the yuan only accounts for 7 per cent of all foreign exchange trades globally, the yuan had “become the world’s fifth-largest payment currency, the third-largest currency in trade settlement and the fifth-largest reserve currency”.
China has moved to settle oil and gas trades in yuan in recent years in a bid to promote its currency internationally and to weaken the dollar’s grip on world trade.
During the first China-Gulf Cooperation Council (GCC) Summit last year, Chinese authorities said that China would continue to import more crude oil and LNG from GCC countries, strengthen cooperation with GCC countries in oil and gas development and clean and low-carbon technologies, and conduct yuan settlement in oil and gas trading.
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