Russia invaded Ukraine on 24 February. As a result, all NATO countries including US have imposed trade sanction against Russia. Those NATO countries which have been buying Russian gas and petroleum are finding alternative source of supply.

To protect Russia’s own interest, Russia signed a new oil sale agreement with China. Russia has agreed a 30-year contract to supply gas to China via a new pipeline and will settle the new gas sales in euros, bolstering an energy alliance with Beijing amid Moscow's strained ties with the West over Ukraine and other issues.

Gazprom, which has a monopoly on Russian gas exports by pipeline, agreed to supply Chinese state energy major CNPC with 10 billion cubic metres of gas a year, the Russian firm and a Beijing-based industry official said. 

Existing supply agreement:

Russia already sends gas to China via its Power of Siberia pipeline, which began pumping supplies in 2019, and by shipping liquefied natural gas (LNG). It exported 16.5 billion cubic metres (bcm) of gas to China in 2021.

China will benefit the most:

As a result, natural gas and Crude oil prices have been dropping sharply. Moreover, the Brent Crack Spread margin has also been dropping sharply as shown on the 3 charts below: 

Brent Crack Spread margin has also been plunging sharply from 33% to 20% in the last few days as shown on the chart below. 

In view of the slump in gas and crude oil prices and the Brent Crack Spread margin reduction, Investors are rushing to sell their holdings.  As a result, Hengyuan share price has been dropping from Rm 7.50 on 18^th May to the current level of Rm 4.27 as shown on the price chart above. It has dropped Rm 3.23 or 43% in less than 2 months.

It has dropped 35 sen today. No one can tell when it will stop dropping. Fortunately, I sold all my holdings earlier.