China boosts LNG imports from Russia, testing Trump's sanctions resolve

By Stephen Stapczynski

 

China appears to be setting up a system to import regular cargoes of liquefied natural gas from a Russian project sanctioned by the US, a move that will test the Trump administration’s willingness to penalize Beijing in its efforts to curb Moscow’s energy revenue.

 

Having taken the first-ever overseas export from the Arctic LNG 2 project in Russia in late August, China is now taking more blacklisted Russian LNG and has designated the Beihai terminal in southern China to accept shipments, according to people with knowledge of the matter. By choosing a single port with limited international exposure, Beijing should be able insulate its wider gas sector from retaliation.

 

Purchases are also being done via a little-known company to obscure the actual end-user, the people said, asking not to be named as the matter is sensitive. 

 

Meanwhile, Chinese importers, including state-owned Cnooc, are diverting regular deliveries away from Beihai to avoid being connected with the trade and falling afoul of the US, the world’s largest LNG exporter, the people said. Several overseas traders are avoiding the port for the same reason, they added.

 

China’s first cargo from Arctic LNG 2 came ahead of Russian President Vladimir Putin’s meeting with his Chinese counterpart, and so was largely seen as a symbolic gesture. By continuing to accept deliveries, Beijing is sending a stronger signal and also threatening to get caught up in Washington’s efforts to pressure Moscow over the war in Ukraine.

 

While the Trump administration has singled out India for its oil trade with Moscow, Beijing so far has escaped similar criticism or economic penalties.

 

A third shipment of fuel from Arctic LNG 2 project is set to land in southern China as soon as Monday, according to ship-tracking data compiled by Bloomberg. At least four more vessels are also en route, the data shows. 

 

The Russian project had struggled to find buyers since it was sanctioned by former President Joe Biden’s administration in 2023, a measure aimed at choking off Russia’s energy export revenues. The facility started shipping out LNG last year via dark fleet vessels, but only successfully delivered to a foreign port with the shipment to China.

 

Trump’s White House hasn’t officially commented on the shipments. This is in stark contrast to the Biden administration, which quickly sanctioned companies and vessels that appeared to be assisting with the export of fuel from Arctic LNG 2. Chinese companies have long been wary of crossing the US, as many have long-term contracts from American export facilities.