Amid a deepening global energy crisis, Russia is attempting to expand its footprint in Asia by offering heavily discounted liquefied natural gas (LNG) sourced from US-sanctioned facilities.
The move comes at a time when supply disruptions and geopolitical tensions have tightened global gas markets, pushing countries like India and Bangladesh to explore alternative energy sources despite regulatory and strategic concerns.
Russia is leveraging the ongoing global gas supply crunch to attract energy-deficient nations in South Asia. According to sources familiar with the matter, shipments from sanctioned facilities are being marketed aggressively through lesser-known intermediary firms based in China and Russia.
These shipments were reportedly offered at a 40% discount to spot prices last week, making them financially attractive to buyers struggling with soaring energy costs. Sellers also indicated that documentation could be arranged to show that shipments originated from alternative sources such as Oman or Nigeria, potentially bypassing restrictions.
The global LNG market has been significantly impacted by geopolitical disruptions. The effective closure of the Strait of Hormuz, a critical energy transit route, along with attacks on Qatar’s major LNG export infrastructure, has disrupted nearly one-fifth of global supply.
Qatar, one of the world’s largest LNG exporters, has seen shipments come to a halt. This has severely affected countries that rely heavily on its gas supplies.
Bangladesh, which sourced 60% of its LNG from Qatar last year, has been forced to turn to the volatile spot market. As a result, it is sometimes paying nearly double compared to its long-term contract prices.
The situation has compelled the country to cut gas supplies to key sectors such as fertilisers, potentially impacting agricultural output and food security.
India is also facing similar challenges. Reduced LNG availability has forced authorities to limit gas allocation to certain industries, including fertiliser production.
However, India continues to maintain a cautious stance when it comes to importing energy from sanctioned sources.
India traditionally adopts a conservative policy regarding imports from sanctioned entities. The government has previously clarified that it will avoid procuring LNG from blacklisted Russian projects.
That said, India has shown some flexibility in exceptional circumstances. Recently, it resumed imports of Iranian oil for the first time since 2019, following a US Treasury general licence that temporarily eased restrictions. This indicates that energy security concerns can influence policy decisions when supply pressures intensify.
Despite Russia’s efforts, most countries remain reluctant to purchase LNG from sanctioned projects such as Arctic LNG 2 and Portovaya. Concerns over potential retaliation or sanctions from the United States continue to deter buyers.
So far, China has emerged as the only major buyer willing to import sanctioned Russian LNG. It has been using a network of shadow fleet vessels to facilitate these transactions, bypassing traditional trade channels.
Russia aims to diversify its export markets by targeting countries beyond China. Expanding into South Asia would help Moscow reduce its dependence on a single buyer and increase revenues from its sanctioned facilities.
The Arctic LNG 2 project, envisioned as Russia’s largest LNG facility, began exports in 2024. However, its full operational capacity has been hindered by logistical challenges, including limited shipping infrastructure and a shortage of willing buyers.
The disruption of LNG supply chains has led to sharp price increases and heightened market volatility, affecting both developed and developing economies.
Countries are increasingly facing difficult choices between securing affordable energy and adhering to geopolitical alliances and sanctions regimes.
Russia’s offer of discounted LNG highlights the growing complexity of global energy markets amid geopolitical tensions and supply disruptions. While the lower prices may appeal to energy-deficient nations like India and Bangladesh, the risks associated with sanctioned trade remain significant.
As the world navigates an uncertain energy landscape, countries will need to strike a delicate balance between affordability, energy security, and international compliance. The evolving situation also underscores the urgent need for diversification of energy sources and accelerated investment in renewable alternatives.