Reuters reports that Russia’s Novatek has sharply reduced the price of its liquefied natural gas cargoes since August, offering discounts of 30% to 40% to encourage Chinese buyers to lift volumes from its sanctioned Arctic LNG 2 project. According to the report, these purchases have ended the commercial standstill that surrounded the US$21-billion facility, which has been under some of the strictest U.S. and European restrictions.
The article notes that the project had struggled to sell a single cargo until the price cut was introduced, despite beginning LNG production in December 2023. Since the discounting strategy began, Novatek has reportedly delivered 14 cargoes to China, marking a shift in the project’s operational momentum.
A Pricing Strategy That Triggered Market Movement
Reuters states that Novatek sold its first discounted shipment on August 28 at US$3–4 below the Asian LNG benchmark of roughly US$11 per mmBtu. Subsequent volumes continued to reflect the 30%–40% reduction, bringing cargo values to US$28–32 million, compared with an estimated market value of over US$44 million. The identities of the Chinese buyers were not confirmed in the report, and Novatek did not respond to a request for comment.
Sanctions Landscape and Regulatory Dynamics
The article outlines that while much of Russia’s energy output is not directly sanctioned, Arctic LNG 2 faces targeted restrictions introduced in December 2023. These measures affected project partners and disrupted Russia’s plans to secure specialized tankers for continuous Arctic shipments. For months, unsold cargoes remained afloat or held in storage, resulting in significant financial strain.
Reuters highlights that although Washington has expanded pressure on governments purchasing Russian energy, it has not taken enforcement action against the Chinese entities buying LNG from this specific project. According to the report, China maintains its stance against unilateral sanctions and has approved the purchases through official channels.
Beihai Terminal’s Shift in Trade Role
Reuters notes that the Beihai LNG Terminal in southern China—operated by state-owned PipeChina—has become the primary entry point for Russian LNG. Previously used to receive gas from several suppliers, including U.S. volumes in 2024, the terminal has since August limited access for non-Russian cargoes. The report adds that the UK placed the terminal under sanctions in October. PipeChina did not comment on the matter.
Broader Trade Context
The report also points out that the United States has aimed to integrate LNG exports into broader trade negotiations, though China has not imported U.S. LNG since February due to tariffs stemming from the ongoing trade dispute.
This development, as outlined by Reuters, places Russian LNG, Chinese energy policy, and U.S. sanctions strategy at the center of a shifting global energy landscape—one that intersects maritime logistics, geopolitical calculations, and evolving terminal utilization patterns.
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Source: Reuters
