China’s leading oil company, China National Offshore Oil Corporation (CNOOC Group) and France’s TotalEnergies have completed China’s first yuan-settled liquefied natural gas (LNG) trade on Tuesday through the Shanghai Petroleum and Natural Gas Exchange (SHPGX).

The SHPGX was established in 2015 and the volume of natural gas traded on the exchange reached 92.86 billion cubic meters last year.

Approximately 65,000 tonnes of LNG imported from the UAE changed hands in the trade, the exchange said in a statement.

According to SHPGX Chairman Guo Xu, "The exchange launched international LNG trading in August 2020 and it will continue to play a platform role and strengthen the financial infrastructure for the cross-border yuan settlement business."

TotalEnergies confirmed the transaction involved LNG imported from the UAE to Reuters. However, it did not comment on the development further.

In recent years, China has emphasized settling oil and gas trades in yuan in a bid to establish its currency internationally and to weaken the dollar's superiority in world trade.

At present, China’s yuan is the fifth most-used payment currency in the world, and its use in foreign exchange trading has increased to a global market share of 7 percent, the fastest growth among currencies in the past three years.

Notably, Russia has increasingly embraced the yuan amid Western sanctions.

Chinese President Xi Jinping, during a visit to the Saudi capital Riyadh in December last year, announced that China would "make full use" of the Shanghai exchange as a platform to carry out yuan settlements of oil and gas trades.

Image courtesy: Representative image/The Economic Times