Metallurgy / Chemicals / Rubber & Plastics

New Trends in International Trade! On March 28th, China National Offshore Oil Corporation (CNOOC) and Total Energy completed the first domestic purchase transaction of imported liquefied natural gas (LNG) settled in RMB through the Shanghai Petroleum and Natural Gas Trading Center platform, with a transaction volume of 3200000 to 340000 million British thermal energy (approximately 65000 tons). LNG resources come from the United Arab Emirates, a member of the GCC.

This is a beneficial attempt by the Shanghai Petroleum and Natural Gas Trading Center to carry out RMB settlement for oil and gas trade, and an important practice to provide new channels for international resource merchants to participate in the Chinese market and help build a new development pattern of domestic and international dual circulation.

In recent years, significant progress has been made in the internationalization of the RMB. At present, the RMB is the world's fifth largest payment currency, third largest trade financing currency, and fifth largest international reserve currency. The share of RMB foreign exchange transactions in the global market has increased to 7%, becoming the currency with the fastest increase in market share in the past three years. Meanwhile, with the continuous deepening of the reform of the RMB exchange rate formation mechanism, the elasticity of the RMB exchange rate has significantly increased, and the willingness of enterprises to use the RMB in cross-border trade, investment and financing to avoid currency mismatch risks has increased. In addition, as the driving force of China's economic growth continues to improve and the financial market further opens up, the investment and hedging functions of the RMB have gradually strengthened.

At the same time, the scale of China's oil and gas imports continues to expand. Data shows that in 2022, China imported over 500 million tons of crude oil and over 100 million tons of natural gas, including 63.44 million tons of imported LNG, with increasingly diversified import sources. With the increasing acceptance of RMB in the international market, the conditions for buyers and sellers to attempt to settle in RMB are becoming increasingly mature.

As one of the important buyers of the global LNG market, China's infrastructure scale is constantly expanding, and the number of participants in international trade is increasing, posing higher requirements for international trade services. The cooperation between the trading center and China National Offshore Oil Corporation (CNOOC) in carrying out international trade RMB settlement will be conducive to promoting the integration of international and domestic markets and efficient circulation of domestic and foreign resources, "said Chen Guozhong, Chief Economist of the Shanghai Development and Reform Commission.

As a leader in the domestic LNG industry, CNOOC has always been committed to collaborating with domestic and foreign parties to innovate international resource pricing and settlement models. This promotion of international resource procurement based on RMB settlement is a beneficial practice of CNOOC in promoting global development of energy trade and building a diversified ecosystem of LNG trading. "Yu Jin, a member of CNOOC's party group and deputy general manager, said that in the future, CNOOC will continue to promote continuous innovation in international trade and business models, and help promote better interaction and mutual promotion between the international and domestic markets, To support the high-quality development and high-level opening up of the Chinese LNG market.

Guo Xu, Chairman of Shanghai Petroleum and Natural Gas Trading Center and Vice President of China Economic Information Society, stated that the first international LNG transaction to be settled in RMB is an attempt to promote multi-currency pricing, settlement, and cross-border payment, following the launch of international LNG trading business by the trading center on August 28, 2020.

Guo Xu introduced that since its establishment, the trading center has actively carried out business innovation, successively launching trading varieties such as natural gas and refined oil, and launching innovative products such as south-to-north gas, one-stop access to imported LNG windows, and capacity trading. Especially in August 2020, a Chinese and English electronic trading system with functions such as bidding, bidding, and consolidation was launched. The international LNG trading rules and international membership management measures were released, and the international LNG trading business was launched. This provides diversified trading channel choices and professional services for domestic and foreign market participants, laying the foundation for cross-border oil and gas trade in RMB settlement. In the future, the trading center will continue to play a platform role, actively connect with international resource providers, strengthen the financial infrastructure construction of cross-border RMB settlement business, improve the digital level of transactions, provide more convenient channels for the full circulation of domestic and international oil and gas resources, and achieve win-win cooperation.