Hungry for fuel, China looks to the U.S., Europe eyes relief plans
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[October 15, 2021] By
Chen Aizhu, Jessica Jaganathan and Scott DiSavino
(Reuters) - China's energy crisis deepened
on Friday with coal prices hitting a record high as cold weather sweeps
in and soaring gas prices prompting major energy companies to seek
long-term deals with U.S. suppliers, sources told Reuters.
Energy security has shot to the top of government agendas in Asia and
Europe as shortages of coal and rocketing gas prices have triggered
power outages and choked up factories supplying big name brands such as
Apple just as the global economy reawakens from coronavirus
To shield consumers from soaring prices as winter approaches, European
Union leaders look set to greenlight emergency measures by member states
including price caps and subsidies, at a summit next week.
China, the world's top exporter, has been particularly hard hit and to
bridge the gap major energy companies such as Sinopec Corp and China
National Offshore Oil Company (CNOOC) are in advanced talks about
long-term contracts with U.S. exporters of liquefied natural gas (LNG),
sources told Reuters.
The discussions could lead to deals worth tens of billions of dollars
that would mark a surge in China's LNG imports from the United States at
a time when relations between the two countries are still tense. At the
height of Sino-U.S. trade war in 2019, gas trade briefly came to a
"As state-owned enterprises, companies are all under pressure to keep
security of supply and the recent price trend has deeply changed the
image of long-term supplies in the mind of leadership," said a
In a blow to the fight against global warming, China and other countries
have turned to coal in the short term. Beijing has also taken a slew of
measures to contain price rises, including raising domestic coal output
and cutting supply to power-hungry industries.
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A coal-burning power plant can be seen in the city of Baotou, in
China's Inner Mongolia Autonomous Region, October 31, 2010.
The most-active January Zhengzhou thermal coal futures contract CZCc1 hit a
record high of 1,669.40 yuan ($259.42) per tonne early on Friday, having risen
more than 200% year to date.
China has assured consumers that energy supplies will be secured for the winter
OIL KEEPS CLIMBING
President Vladimir Putin told Europe this week that Russia, the regionís largest
gas supplier, could provide more gas if asked but some European politicians
accuse Moscow of using the fuel crisis for leverage, a charge Russia denies.
Oil prices rose again on Friday to trade not far off their highest since 2014
close to $85 per barrel for benchmark Brent crude as the global gas and coal
crunch encourages some consumers to switch to refined products.
Poland's climate minister said on Friday the government will provide consumers
with an additional 1.5 billion zlotys ($380 million) in subsidies to ease the
pain as retail prices climb.
Germany confirmed it was slashing a green energy surcharge on consumers' bills
to help with soaring utility bills.
European wholesale natural gas prices are unlikely to return to "normal" levels
before 2023, warned Dutch bank ABN Amro.
Norway, Europe's second biggest gas supplier, has been among the winners of the
energy crisis, reporting a record trade surplus up 28% to 53.7 billion Norwegian
crowns ($6.37 billion)last month thanks to soaring revenues from selling gas,
official data showed.
(Reporting by Chen Aizhu, Jessica Jaganathan in Singapore and Scott Disavino in
New York, Shivani Singh in Beijing and Beijing newsroom; Writing by Elaine
Hardcastle: Editing by Carmel Crimmins)
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