Russia is pushing sanctioned liquefied natural gas (LNG) into new markets at discounts of up to 40 percent. This is driven by the tense situation on the global market during the Iran-Iraq War, as the near-complete closure of the Strait of Hormuz and the disruption of Qatari deliveries have cut off roughly one-fifth of the global LNG supply. At the heart of this is Arctic LNG 2, an export project by Novatek that has been producing since the end of 2024 and was already subject to US sanctions in 2023. At the same time, Moscow is allegedly attempting to obscure the origin of the shipments through intermediaries and suspicious documentation. Countries in South and Southeast Asia are particularly under pressure because they urgently need replacements. For countries like India and Bangladesh, the risk is therefore growing that they will have to choose between security of supply, sanctions, and high costs. (bloomberg: 09.04.26)
LNG Discount Becomes a Crisis Deal for Asia
The situation is deteriorating noticeably, especially in South Asia. India and Bangladesh have recently had to increasingly purchase LNG on the spot market, where prices were sometimes twice as high as in existing contracts. This is precisely why even politically risky deliveries are gaining importance again.
In Bangladesh, the consequences are already evident in the economy. Parts of the fertilizer industry are receiving less gas, while the country’s supply is under pressure. For many governments, availability is therefore the primary concern, not just the political origin of the fuel.
Moscow obscures supply routes and origin
Russia is focusing its efforts primarily on Arctic LNG 2. The project is one of the country’s most important LNG projects, while US sanctions are severely hindering financing, insurance, and transport. The operator is Novatek, Russia’s largest private LNG exporter.
According to Bloomberg, offers are being routed through intermediaries in China and Russia. Furthermore, documents are reportedly being issued to indicate other countries of origin, such as Oman or Nigeria. This method is intended to facilitate access to buyers, while many direct customers fear sanctions from Washington. The substantial discounts, however, are making such deliveries attractive again for countries in crisis.
Tanker Shortages Limit Russia’s Expansion
Russia exports liquefied natural gas (LNG) not only via Arctic LNG 2. Novatek also operates Yamal LNG in the Arctic, and Gazprom ships LNG via the Portovaya terminal near St. Petersburg. Deliveries to European customers continue from there, while EU sanctions against Russian gas will not be fully implemented until 2027.
Despite the crisis and price reductions, Moscow is reaching clear limits. There is a shortage of buyers, tankers, and service providers because many shipping companies avoid sanctioned projects. So far, China is the primary buyer of such volumes, while broader expansion remains uncertain. The additional discount helps with sales but does not solve the transportation problem.