China's LNG Rush: Beating the Odds with Sanctioned Russian Gas
In a move that defies international pressure, China has taken delivery of at least 24 sanctioned Russian liquefied natural gas (LNG) shipments since late August. The cargo, which included a significant shipment from Portovaya plant in December, underscores the increasingly close ties between Beijing and Moscow as both nations seek to circumvent economic sanctions.
Russia's LNG exports have become crucial to funding its war effort in Ukraine, with Moscow looking to boost production to meet growing demand. However, US-led sanctions imposed on certain Russian LNG facilities, including Portovaya and Arctic LNG 2, made it seem like an impossible task. The Kremlin responded by creating a "dark fleet" of LNG tankers to transport its gas surreptitiously around the world.
In recent months, China has emerged as a crucial buyer for Russia's sanctioned LNG. At least one million tons of Russian gas have now been delivered to Chinese ports since August 2024. This surge in trade highlights the importance of energy cooperation between the two nations, with experts pointing out that cheap LNG is just the beginning.
"The main benefits [for China] are that they get access to very cheap LNG, discounted by 30 to 40 percent," noted Kjell Eikland, managing director at Eikland Energy. "The second one is that it reinforces the cooperation on the political level between Russia and China."
For Moscow, the deal is a diplomatic coup, demonstrating its ability to find business partners despite severe sanctions. "For Russia, the main point is mainly political," added Eikland. The Kremlin has long seen China as a key player in its foreign policy efforts, and this LNG trade can be seen as a high-stakes proof of concept.
The implications of China's growing reliance on sanctioned Russian gas are far-reaching, however. As tensions between Russia and the West continue to simmer, Beijing is walking a delicate tightrope between economic interests and diplomatic relationships with Western nations. While China has not officially distanced itself from US-led sanctions, its decision to buy Russian LNG has raised eyebrows among policymakers.
As the global energy landscape continues to shift, one thing is clear: China's LNG rush will have significant implications for international trade and geopolitics.
In a move that defies international pressure, China has taken delivery of at least 24 sanctioned Russian liquefied natural gas (LNG) shipments since late August. The cargo, which included a significant shipment from Portovaya plant in December, underscores the increasingly close ties between Beijing and Moscow as both nations seek to circumvent economic sanctions.
Russia's LNG exports have become crucial to funding its war effort in Ukraine, with Moscow looking to boost production to meet growing demand. However, US-led sanctions imposed on certain Russian LNG facilities, including Portovaya and Arctic LNG 2, made it seem like an impossible task. The Kremlin responded by creating a "dark fleet" of LNG tankers to transport its gas surreptitiously around the world.
In recent months, China has emerged as a crucial buyer for Russia's sanctioned LNG. At least one million tons of Russian gas have now been delivered to Chinese ports since August 2024. This surge in trade highlights the importance of energy cooperation between the two nations, with experts pointing out that cheap LNG is just the beginning.
"The main benefits [for China] are that they get access to very cheap LNG, discounted by 30 to 40 percent," noted Kjell Eikland, managing director at Eikland Energy. "The second one is that it reinforces the cooperation on the political level between Russia and China."
For Moscow, the deal is a diplomatic coup, demonstrating its ability to find business partners despite severe sanctions. "For Russia, the main point is mainly political," added Eikland. The Kremlin has long seen China as a key player in its foreign policy efforts, and this LNG trade can be seen as a high-stakes proof of concept.
The implications of China's growing reliance on sanctioned Russian gas are far-reaching, however. As tensions between Russia and the West continue to simmer, Beijing is walking a delicate tightrope between economic interests and diplomatic relationships with Western nations. While China has not officially distanced itself from US-led sanctions, its decision to buy Russian LNG has raised eyebrows among policymakers.
As the global energy landscape continues to shift, one thing is clear: China's LNG rush will have significant implications for international trade and geopolitics.