Russia offers discounted LNG amid Gulf disruptions

Russia is offering South Asian buyers liquefied natural gas (LNG) cargoes at 40% below spot rates to replace Gulf supplies disrupted by the Iran war, Bloomberg reports, citing sources familiar with the matter. The cargoes are tied to Russian projects under US sanctions, including Arctic LNG 2. Sellers are reportedly using intermediary trading firms in China and Russia to facilitate transactions and provide shipment documentation that reflects alternative origins including Oman or Nigeria.

Why South Asia? The blockade of the Strait of Hormuz and damage to Qatar’s Ras Laffan — the world’s largest LNG plant — have squeezed global LNG availability. This supply crunch, combined with rising prices, has sent procurement costs soaring for import-dependent nations of India, Pakistan, Bangladesh and Sri Lanka.

Why it matters: India relies on Qatar for about 41% of its LNG imports, leaving it exposed to supply disruptions in the Gulf, while Bangladesh — which sourced about 60% of its LNG from Qatar last year — has increased spot purchases, at times paying nearly twice its long-term contract prices. Both countries have reduced gas allocation to industries to mitigate shortages.

Sanctions overhang: Most buyers remain cautious due to potential US penalties. However, some countries — like China — have continued importing Russian LNG through alternative shipping channels.