Russia provides China with liquefied gas at a 30-40% discount – media

Novatek sold the first LNG cargo from the Arctic LNG 2 project to Chinese buyers

The Russian company Novatek has made its first LNG delivery to China in almost two years, significantly reducing its product prices.

Novatek, one of Russia’s leading LNG producers, executed its first delivery from the new Arctic LNG 2 project plant to China on August 28. This move was enabled by a significant reduction in liquefied gas prices by 30-40% amid sanction pressures. Discounts of $3 to $4 per million British thermal units allowed the company to execute the deal at a price of $28 to $32 million per cargo, much lower than the market value of $44 million.

Novatek’s decision to lower prices was driven by the desire to interest Chinese buyers amid international sanctions against Arctic LNG 2. This became part of the company’s strategy aimed at entering the Asian market, where China is one of the main energy resource importers. Additionally, the delivery implementation was made possible with the approval from the Chinese government.

It is important to note that despite significant restrictions from the US and Europe, Russia’s energy resources, including oil and gas, have not yet been fully banned. However, sanctions imposed by President Joe Biden’s administration on Arctic LNG 2 restrict American companies and vessels from participating in the project.

Faced with challenges in the global market due to sanctions, Novatek is compelled to seek alternative paths for product realization, indicating a reformatting of energy relations between Russia and China.