October 3, 2022

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The Chinese are selling us Russian gas (and we’re destroying ourselves)

in This is the sound ‘room’ on Twitter What is perhaps America’s foremost energy expert, Prof. Anas Al-Hajji He discusses the energy market today in front of 50,000 listeners on Twitter and explains how the Chinese buy Russian LNG on contracts and then resell it to Europeans in the fund market.

This is the famous Ttf del Market liquefied gas And sent by ship to Holland:

In short, the Chinese will probably pay the equivalent of 50€/MWh (exact price is unknown) and then the tanker that takes it instead of China goes to Holland to resell it to Ttf to Europeans at 200€/MWh.

The famous liquefied gas market “Ttf” (called “Lng” in English and LNG in Italian) is gas futures marketwhere you can either speculate (buy and sell without having the gas delivered to you) or “book” actual gas delivery for the next few months.

Note, for example, that Numisma Energy Expert, Taparelli, has made this clear several times in the papers It costs the Russians about 10 euros / megawatt-hour to produce gas. It is then liquefied and shipped by ship and this obviously adds a few extra euros per MWh of the cost. But we are talking about 20% of what we have read, so gas that costs the Russians 10 euros to extract, liquefy and transport by ship will cost about 12 euros.

The Russians sell it to the Chinese With a contract (not in a “market” of derivative contracts such as Ttf and its Asian equivalent called “Jkh”). Obviously no one mentions the exact price, but if the price is 50€ or even just 30€, they earn very well. And if the Chinese resell it in Europe for 200 euros, they earn a bundle of money.

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You might not really realize it For twenty years, the cost of gas on the market or in contracts was about 20 or 30 euros per MWh. And starting this summer, there is talk of selling it for 200 or 300 euros in Europe, in question and transported by ship.

Those who resell liquefied gas in Europe are getting richer than the sheikhs can do, because the price of oil from the 1970s onwards doubled sometimes and sometimes tripled, but never more than ten times as much gas in Europe.

In this movement of liquefied gas resold in Europe, the Russians and the Chinese are very happy. Even the Americans who sell it to TTF are happy Because it costs the equivalent of about 20 euros per megawatt-hour (equivalent to 6-7 dollars per MBtu, which is the US unit of measurement).

To be precise, the movement of the Chinese who buy Russian LNG through contracts and then bring it to the Netherlands for resale is currently limited because The Russians at the moment do not have a large capacity to liquefy gas. To date, Gazprom has sold about 90% via pipelines because it is much less expensive and cheaper. But at a price of ten times it is enough to sell a little, and you can make money as before even if the gas sent through the pipeline to Europe is reduced to zero.

then now Everyone in the world threw themselves into building stations To liquefy gas and turn it back into gas to be sent by ship. Even the Russians in a year or two will be able to monetize more. Russian gas is the cheapest in the world to extract (it costs less than half the US and 20% less than Algerian) so he will always find someone he wants in India, China or Japan.

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It is clear that we summarize the complex problems of the energy market, but in our opinion, the flaw in the analysis of experts in newspapers is that they do not get to the heart and often confuse ideas. The fact of the matter is that by imposing a ban on Russia and seizing about 500 billion of its accounts, assets and By pushing ourselves to buy LPG, we have increased the price of gas by 10 times. So now the Russians are making more money, the Americans are making more money, and the Asians are buying Russian oil and gas at prices much lower than ours. The only certain thing is that we Europeans and Italians, under the wise guidance of our rulers, pay on the other hand ten times more energy as we destroy ourselves.

Paolo Pique and Giovanni Zipordi, September 9, 2022