Russia Expands Sanctioned LNG Exports to South Asia Amid Crisis

Russia is reportedly seeking to capitalize on a global natural gas shortage by offering discounted liquefied natural gas (LNG) to energy-starved countries in South Asia, according to sources familiar with the matter. The initiative aims to expand exports from US-sanctioned Russian facilities and diversify Russia’s customer base beyond China, the current primary buyer of restricted shipments.

Last week, shipments from Russian facilities were reportedly being offered at a 40% discount to spot market prices through intermediary companies based in China and Russia. The sellers said they could provide documentation making the cargo appear as if it originated from non-Russian sources, including Oman or Nigeria. It remains unclear whether any of these shipments were purchased.

The move comes amid heightened disruption in global LNG supplies, with the effective closure of the Strait of Hormuz and attacks on Qatar’s LNG export infrastructure cutting roughly 20% of global output. The shortage has forced countries such as Bangladesh and India to seek more expensive spot-market shipments, significantly raising energy costs. Bangladesh, which sourced 60% of its LNG from Qatar last year, has at times paid double the price under long-term contracts, while both nations have had to restrict gas supplies to fertilizer producers.

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India, which typically adopts a cautious stance on importing sanctioned oil and gas, has so far avoided Russian LNG from blacklisted projects, though it recently purchased Iranian crude under a US Treasury general license. Russia, meanwhile, has steadily expanded output from its sanctioned plants, including Arctic LNG 2 and Portovaya, but exports remain limited due to shipping constraints and buyer caution. China continues to be the primary importer via a network of shadow fleet vessels.

Industry analysts say expanding shipments to South Asian markets would allow Russia to bypass reliance on Chinese buyers and increase utilization of its blacklisted LNG facilities. Arctic LNG 2, Russia’s largest planned LNG plant, began exports in 2024 but has yet to reach full operational capacity. Analysts note that Washington’s sanctions have kept most potential buyers wary of restricted Russian energy, limiting Russia’s ability to fully monetize the facilities.

With global LNG markets strained and energy demand in Asia rising, Russia’s strategy highlights how sanctioned producers can leverage supply shortages to find alternative markets, despite potential diplomatic and regulatory risks.

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