Russia ranked second among China’s liquefied natural gas (LNG) suppliers in November, overtaking Australia after more than doubling exports, Chinese customs data showed.
But volumes are expected to fall sharply before next summer due to Russia’s lack of ice-class tankers needed to ship gas from the sanctioned Arctic LNG 2 project.
Imports of Russian LNG totaled 1.6 million tons in November, up from 1.3 million tons in October and 0.7 million tons a year earlier, Bloomberg reported, citing Chinese customs data.
The increase allowed Russia to surpass Australia, which supplied 1.5 million tons, while Qatar remained China’s top supplier.
The rise was driven by shipments from Arctic LNG 2, a Novatek-led project under Western sanctions.
Since late August, China has allowed deliveries from the project into Beihai port, which Beijing designated to receive sanctioned Russian LNG, according to Bloomberg.
As with oil, Russia has been forced to sell its LNG at a steep discount due to Western restrictions.
Russian LNG was the cheapest among cargoes supplied by China’s 12 LNG exporters, trading about 10% below the average price of $9.85 per million British thermal units (mmBtu), customs data showed.
Gas from Arctic LNG 2, whose exports were delayed for more than 18 months due to sanctions, has become an important addition to Russia’s sanctioned exports alongside supplies from Yamal LNG, another Novatek project not subject to the same restrictions.
Before reaching an arrangement with China, Novatek had shipped Arctic LNG 2 output only to floating storage facilities near Murmansk and in Kamchatka.
Limited exports from those storage units may continue in the near term. However, Arctic LNG 2 cut production in November ahead of the winter season, with output falling by about half from October.
Russia has only one Arc7 ice-class LNG tanker capable of navigating Arctic ice during the winter and spring months, the Christophe de Margerie.
As a result, exports from Arctic LNG 2 will be largely impossible until ice conditions improve around June.
The U.S.-sanctioned Arc4-class tanker Buran attempted to reach Arctic LNG 2 through ice from late November but turned back in mid-December and returned to Murmansk, Bloomberg reported, citing vessel-tracking data.
Arctic LNG 2 has two production lines with a combined annual capacity of about 13.2 million tons, but just over 1 million tons have been exported since June, Bloomberg reported.
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