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. As OilPrice notes, the 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 (because China will never admit that it is re-exporting Russian LNG even though it now does it all the time) 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. 

France bought 65,000 tons of LNG using the Chinese yuan

The liquified natural gas was bought from the UAE, the payment is settled in the Shanghai Petroleum and Natural Gas Exchange, using Chinese yuan

We are witnessing the end of the US dollar hegemony. pic.twitter.com/GfX17nKxA1

— Zhao DaShuai 无条件爱国🇨🇳 (@zhao_dashuai) March 29, 2023

For years, China has sought to establish more trade agreements using the yuan currency in order to increase the global significance of the petroyuan (or LNG-yuan) and challenge the U.S. dollar’s dominance in international trade, particularly in energy trade. During a significant visit to Riyadh in December, Chinese President Xi Jinping suggested that China and the Arab Gulf nations use the Shanghai Petroleum and National Gas Exchange as a platform for yuan settlement of oil and gas trades.

President Xi stated in December, as reported by Reuters, “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.”

However, Beijing still has a long way to go before the yuan currency can surpass the U.S. dollar as the global reserve currency. Currently, the yuan accounts for just 2.7% of the market, while the U.S. dollar holds a share of 41%.

Despite this, the yuan currency has gained momentum over the past year. In response to Western sanctions on its exports, imports, and energy trade, Russia has turned to trade in yuan, with the Chinese currency becoming Putin’s only alternative to reduce exposure to the U.S. dollar and the euro.