DUBAI – The United Arab Emirates was part of a historic transaction on China’s national energy trading platform this week.
What happened: China made its first ever yuan-denominated energy deal involving around 65,000 tonnes of Emirati liquefied natural gas (LNG). China National Offshore Oil Corporation and France’s TotalEnergies made the transaction through the Shanghai Petroleum and Natural Gas Exchange, the exchange reported on Tuesday.
Total Energy Reuters said the transaction involved LNG imported from the UAE, but gave no further comment.
Why it’s important: China has repeatedly held discussions with countries in the Middle East and North Africa about trading using its local currency.
Last month, the Central Bank of Iraq said it will trade with China in yuan. This is partly due to the shortage of US dollars in the country as it faces restrictions from the US Federal Reserve which wants to stop dollar transfers to Iran from being approved.
In January, Saudi Finance Minister Mohammed Al-Jadaan said in an interview with Bloomberg at the World Economic Forum in Davos that the kingdom is open to trading in currencies other than the US dollar to “improve trade.” This echoed his comments from last time. year saying that the kingdom is considering pricing oil sales to China in yuan.
Egypt announced its plans to issue bonds in yuan in August 2022. Israel added the yuan, as well as Canadian and Australian dollars to its foreign reserves last April.
More information: During a visit to Saudi Arabia in December, Chinese President Xi Jinping asked Gulf countries to use the Shanghai Petroleum and Natural Gas Exchange to conduct energy transactions in yuan.