China has just completed its first trade of liquefied natural gas (LNG) settled in yuan, the Shanghai Petroleum and Natural Gas Exchange said on Tuesday.
Chinese state oil and gas giant CNOOC and TotalEnergies completed the first LNG trade on the exchange with settlement in the Chinese currency, the exchange said in a statement carried by Reuters.
The trade involved around 65,000 tons of LNG imported from the United Arab Emirates (UAE), the Shanghai Petroleum and Natural Gas Exchange added.
The French supermajor, one of the world’s top LNG traders, confirmed to Reuters that the trade involved LNG imported from the UAE, but declined to comment further on the deal.
China has been looking for years to establish more trade deals in yuan to increase the relevance of its currency on the global markets and challenge the U.S. dollar’s dominance in international trade, including in energy trade.
During a landmark visit to Riyadh in December, Chinese President Xi Jinping said that China and the Arab Gulf nations should use the Shanghai Petroleum and National Gas Exchange as a platform to carry out yuan settlement of oil and gas trades.
“China will continue to import large quantities of crude oil from GCC countries, expand imports of liquefied natural gas, strengthen cooperation in upstream oil and gas development, engineering services, storage, transportation and refining, and make full use of the Shanghai Petroleum and National Gas Exchange as a platform to carry out yuan settlement of oil and gas trade,” Xi said in December, as carried by Reuters.
While the Chinese currency has made inroads in global trade, the yuan accounts for just 2.7% of the market, compared to the U.S. dollar’s share of 41%.
Over the past year, Russia has turned to trade in yuan in the wake of the Western sanctions on its exports, imports, and energy trade, as the Chinese currency has become Putin’s only alternative to reduce exposure to the U.S. dollar and the euro.