Sanctioned Russian LNG Finds Buyers in Asia at Deep Discounts

Russia has offered several cargoes of liquefied natural gas from Novatek’s Arctic LNG 2 facility to South Asian buyers, Bloomberg has reported, noting the facility is under U.S., EU, and UK sanctions.

Citing unnamed sources, the publication wrote today that the LNG was offered at discounts of up to 40% to spot market prices, which have surged recently because of the LNG supply disruption resulting from the U.S. and Israeli war against Iran.

Also, per the Bloomberg sources, the cargoes were offered via intermediary companies from China and Russia, whose representatives said they could provide paperwork stating the LNG originated from other LNG exporting countries such as Oman and Nigeria.

Earlier this week, the Yamal LNG export plant in Russia shipped its first cargo to China in five months as the EU launches, in a few weeks, a stepwise plan of banning imports of Russian natural gas.

Yamal LNG, operated by Russia’s top LNG producer and exporter Novatek, had the Geneva carrier loaded in recent days and en route to China with an estimated time of arrival May 15, according to LSEG data cited by Reuters.

Yamal LNG shipments would be allowed into the EU for a few more months as the export facility is not under sanctions, unlike Arctic LNG 2, which is confined to selling into China in defiance of U.S., EU, and UK sanctions. In February, all of the LNG cargo that Novatek loaded from Yamal LNG was sent to EU countries, Kpler data showed in March.

Asian countries have suffered a serious blow from the suspension of operations at Qatar’s LNG hub following Iranian strikes on infrastructure in the area. With the Guld state declaring force majeure on LNG exports, Asian buyers had to find new suppliers quickly, at reasonable prices. Some, failing that, are switching to coal power generation, including Japan, despite its much deeper pockets than other Asian nations.

By Irina Slav for Oilprice.com

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