Beijing holding a “wonderful piece of leverage”
by Veselin Valchev: Friday, 20 Nov 2015
Royal Dutch Shell Plc (LON:RDSA) might have to shell out in order to get regulatory approval from Chinese authorities for its proposed takeover of fellow UK energy giant BG Group.
According to unnamed sources cited by Reuters, the Chinese ministry of commerce has requested that Shell review liquefied natural gas (LNG) prices in long-term supply contracts with the nation’s top energy companies – CNPC, CNOOC and Sinopec.
“It’s a reasonable request given the premiums Chinese and other Asian buyers are paying for long-term LNG versus those for Europe and America. The market is oversupplied, and this situation may well last through the next five to 10 years,” said a gas official with one Chinese state energy firm.