LNG at 40% Discount? Russia Targets South Asia Amid Hormuz Crisis

Russia is attempting to use the global gas supply crisis triggered by the Strait of Hormuz disruption and attacks on Qatari LNG infrastructure to push sanctioned energy into South Asian markets, according to a Bloomberg report.

The report said Russia is offering shipments at steep discounts through obscure intermediaries and, offering to falsify the paperwork to disguise where the gas came from.

The shipments, sourced from Russia's US-sanctioned LNG facilities, were being offered last week at a 40% discount to spot prices via little-known intermediary companies based in China and Russia, Bloomberg said, citing people who asked not to be identified as they were not authorised to speak to the media.

The sellers told prospective buyers they could provide documentation making the cargoes appear to have originated from non-Russian sources such as Oman or Nigeria, the report said.

The Energy Shock

The offer arrives at a moment of acute vulnerability for gas importers across the region. The effective closure of the Strait, combined with strikes on Qatar's Ras Laffan LNG complex — the world's largest LNG export facility — has removed roughly a fifth of global supply from the market, sending prices sharply higher and leaving countries that depend heavily on Qatari gas with few good options.

Bangladesh, which sourced 60% of its LNG from Qatar last year, has been forced onto the spot market, at times paying roughly double its long-term contract price. Qatar is now India’s largest and dominant supplier of LNG, accounting for nearly 40% of the country’s total imports, according to the Impact and Policy Research Institute, and almost all of it from Ras Laffan.

India depends on imports to meet over 88% of its crude oil requirement, 60% of its LPG needs, and around 50% of its natural gas requirement. Nearly 60% of India’s LNG and 90% of LPG imports come through the Strait of Hormuz. With the closure of the Strait of Hormuz and a production suspension by QatarEnergy, India already cut natural gas supplies to certain industries.

Both Bangladesh and India have had to reduce gas allocations to their fertiliser sectors as LNG deliveries have fallen short.

India's position is a delicate one. The country has historically taken a cautious line on sanctioned Russian energy, and its government has previously stated explicitly that it will not import LNG from blacklisted Russian projects. India did purchase its first Iranian oil shipment since 2019 last month, following a US Treasury general licence waiving restrictions, but sanctioned Russian LNG is a different and more politically fraught proposition.