How Russia's sanctioned Arctic gas found a Chinese loophole

To understand how effective U.S. sanctions on Russian oil could be, look no further than the already-sanctioned Arctic gas project central to Moscow's export ambitions.

- Georgi Kantchev & Rebecca Feng

The U.S. and allies aimed to hobble Russia's energy industry, but Moscow has found workarounds.

(BLOOMBERG)

In multiple rounds of blacklisting, the Biden administration crippled the logistics, shipping and financing ecosystem around the natural-gas facility known as Arctic LNG 2, publicly aiming to leave it "dead in the water." Yet since August, Russia has managed to send 11 tankers full of liquefied natural gas from the plant, ship-tracking data show.

On the receiving end: China’s port of Beihai, a city famed for its picturesque beaches that once served as a key stop along the ancient Maritime Silk Road. Now, it has emerged as a crucial node in the export of sanctioned gas from the Russian Arctic.

"It benefits both the Chinese economy and the Russian war machine," said Alexander Gabuev, who is the director of the Carnegie Russia Eurasia Center and focuses on ChinaRussia relations. "China no longer feels the need to be overly concerned about the U.S. reaction."

The U.S. and its allies have tried to cripple Russia’s energy industry since the invasion of Ukraine, but Moscow has found loopholes time and again. The Beihai gas route has become a key channel for that effort and a means to further deepen its ties with China.

The latest sanctions came last week when the Trump administration imposed new measures on Rosneft and Lukoil, Russia’s two largest oil exporters. On the same day, the Iris, a tanker the length of nearly three football fields, docked at Beihai in southern China carrying LNG from the sanctioned Russian gas facility.