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By Stephen Stapczynski and Rong Wei Neo
Blacklisted Russian liquefied natural gas shipments are poised to keep entering China as both countries seem prepared to circumvent the UK’s latest sanctions.
The UK on Wednesday imposed restrictions on the Beihai LNG terminal in southern China, citing its imports of fuel from a sanctioned Russian facility. However, at least one shipment is currently en route to the unit, with another vessel waiting offshore, ship-tracking data compiled by Bloomberg show.
Moscow and Beijing had anticipated possible Western retaliation against Beihai. China designated the terminal as the sole entry point for cargoes from Arctic LNG 2 — a Russian project already sanctioned by the US and UK. Other Chinese importers have since stopped using the terminal.
By concentrating such imports at a single facility that doesn’t ensnare other companies, Beijing has effectively shielded its broader gas sector from potential fallout. Traders surveyed by Bloomberg expect Arctic LNG 2 flows to China to continue.
“Beijing’s leadership preempted any targeted Western sanctions,” said Malte Humpert, founder of the Arctic Institute, a Washington-based think-tank. “Only a more concerted and unified approach by the US and the EU, including secondary sanctions, could likely persuade China to reconsider its stance on Russian LNG.”
Read More: Russia Steps Up Exports of US-Sanctioned LNG in Test for Trump
Beihai has only taken deliveries from Arctic LNG 2 since late-August, according to ship-tracking data compiled by Bloomberg. Nine have arrived during that period. Meanwhile, Russia continues to export from the facility, with a tanker currently heading to the plant to load a cargo, the data show.
A bigger impact on deliveries to Beihai in the near-term will likely be the lack of specialized LNG carriers capable of traversing icy waters to reach the Russian facility during winter, according to Humpert.
The UK’s efforts to halt Russian crude flows to China also face challenges. The Shandong Yulong Petrochemical facility, which the British government hit with restrictions on Wednesday, is expected to continue procuring and processing Russian crude, according to analysts from Energy Aspects and Kpler.
“Beijing does not recognize unilateral measures imposed by the UK,” said Muyu Xu, senior crude analyst at Kpler.
(Updates with survey of traders in the fourth paragraph.)
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