Other BriefingsChina Conducts First LNG Purchase In RMB Yuan With United Arab Emirates
China has conducted its first liquefied natural gas (LNG) purchase settled in Yuan, the Shanghai Petroleum and Natural Gas Exchange announced on Tuesday. The trade involved around 65,000 tons of LNG imported from the United Arab Emirates, according to the exchange.
TotalEnergies, which is one of the world’s top exporters of LNG, confirmed a transaction involving the UAE. The move is the latest sign of the Yuan’s growing role on the international stage. As part of its de-dollarization strategy, Beijing has been promoting settlements in national currencies other than the US Dollar and Euro. The Yuan is set to be a player in future global energy transactions, just as the ‘Petro-Dollar’ was before it. Now, we have the ‘PetroYuan’.
During his visit to Saudi Arabia in December, Chinese President Xi Jinping stated that his country would “make full use of the Shanghai Petroleum and National Gas Exchange as a platform to carry out RMB Yuan settlement of oil and gas trade.”
Russia became China’s largest oil supplier in the first two months of 2023 and is set to become the country’s top gas exporter. Moscow has increasingly embraced settlements in RMB Yuan amid Western sanctions.
The latest data from the Bank of Russia shows the RMB Yuan has become a major player in Russia’s foreign trade, with its share of the country’s import settlements jumping to 23% by the end of last year, from only 4% in January 2022. The Yuan’s share in export settlements has also surged, from 0.5% to 16%.
The move also consolidates the UAE as a transactional hub for global LNG movements in non-Western currencies. The Dollar and Euro are now considered potentially problematic in light of their use in sanctions against Russia and fears that the West could attempt secondary sanctions upon third party nations, especially in Asia where trade with Russia is still high.
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