Russia is attempting to capitalize on the ongoing global natural gas shortage by offering discounted liquefied natural gas (LNG) shipments to energy-hungry South Asian countries, despite Western sanctions on its export facilities. According to sources familiar with the matter, these shipments are being marketed at roughly 40% below current spot prices through intermediary companies based in China and Russia. The sources requested anonymity as they were not authorized to speak publicly.

To circumvent sanctions and other restrictions, sellers have purportedly offered documentation suggesting that the LNG originates from non-Russian suppliers, including countries such as Oman and Nigeria. It remains unclear whether any of these discounted shipments have been purchased by South Asian buyers.

The LNG market has been severely disrupted following heightened tensions in the Middle East, including the near closure of the Strait of Hormuz and attacks on the world’s largest LNG export facility in Qatar. These events have led to the suspension of Qatar’s LNG shipments, which previously accounted for a significant portion of the supply to countries like Bangladesh and India.

In Bangladesh, where Qatar supplied 60% of LNG last year, importers have turned increasingly to the spot market, often paying premiums up to double those under longstanding contracts with Qatar. Both Bangladesh and India have reportedly reduced gas allocations to their fertilizer industries due to these supply constraints.

India has maintained a cautious stance on importing sanctioned energy products. Its government has stated it will not procure Russian LNG from blacklisted projects, although it recently resumed imports of Iranian oil under a U.S. Treasury general license that temporarily waived restrictions. This cautious approach contrasts with China’s purchases, which so far remain the primary destination for Russian LNG sourced from U.S.-sanctioned export plants such as Arctic LNG 2 and Portovaya.

Russia has been gradually increasing production at these sanctioned facilities, with Arctic LNG 2 commencing exports in 2024. However, full plant output has been impeded by limited shipping capacity and a shortage of willing international buyers due to the risk of sanctions-related consequences from the United States.

Expanding sales to countries beyond China, including those in South Asia, would enable Russia to diversify its LNG export markets and make fuller use of its sanctioned production capacity. Whether South Asian countries are prepared to risk potential political and economic repercussions by engaging with these shipments remains uncertain amid ongoing geopolitical complexities.