China Announced First Oil Deal Using Yuan for Payment

March 31, 2023, 2022 (EIRNS)—“China National Offshore Oil Corporation (CNOOC) and France’s TotalEnergies announced on March 28 their just-completed first yuan-settled liquefied natural gas deal, run through the Shanghai Petroleum and Natural Gas Exchange. This particular exchange was created in 2020 with a specific area for payments in RMB,” reported China Daily on March, 28. The exchange totalled close to 65,000 tons of LNG, imported from the United Arab Emirates.

The symbol is quite strong, since too long ago, anyone dealing with oil in a currency other than the dollar was considered as committing lese majesté to the dollar system, deserving of at least regime change. It reveals the rapidity with which China, Russia and the BRICS are moving, not only away from the dollar, but towards a new financial system and a new world economic order.

This deal follows the Dec. 8-9, 2022 visit of President Xi Jinping to Saudi Arabia, at which the subject of using yuan payments for Saudi Arabian oil was discussed with King Salman bin Abdulaziz al-Saud and Crown Prince Mohammed bin Salman, who is the prime minister. It was also raised at two summits in Saudi Arabia, both attended by President Xi, for the same occasion, on Dec. 9: a summit of the Gulf Cooperation Council (Bahrain, Kuwait, Oman, the State of Qatar, Saudi Arabia and the United Arab Emirates); and the First China-Arab States Summit, which included with leaders from 21 countries of the Arab League. The subject of the discussion was a strategic partnership and global economic development.

“According to Guo Xu, chairman of the exchange, the first international LNG transaction settled in yuan promotes multi-currency pricing, settlement, and cross-border payment,” the kinds of issues being discussed in the context of the possibility of creating a new monetary system.

“The exchange will actively connect with international resource traders and strengthen the financial infrastructure construction of cross-border yuan settlement business, while enhancing digital trading capabilities to provide more convenient channels for domestic and international oil and gas resources,”

Guo said.

Indicative of the kind of leverage China could have in these areas, China Daily notes that the scale of China’s oil and gas imports has been growing in recent years. In 2022, China imported more than 500 million tons of crude oil and more than 100 million tons of natural gas, including 63.44 million tons of LNG, with sources becoming increasingly diversified.