India Rejects Russian LNG Under Sanctions

India rejected Russia’s offer ​to sell it liquefied natural gas subject to US sanctions, despite a huge shortfall driven by Middle East tensions, leaving a tanker bound for India in limbo as talks continue on permitted cargoes, Reuters reports.

The stance highlights the fine balance the world’s third-biggest oil importer and consumer is seeking to strike between securing energy supplies and avoiding LNG cargoes on which the U.S. has ​placed sanctions, which are harder to disguise and carry greater compliance risk. It also underscores the limits of Moscow’s ability ​to pivot its LNG exports to new markets.

India's reluctance has left an LNG cargo from Russia's U.S.-sanctioned Portovaya ⁠plant in the Baltic Sea unable to discharge, despite indicating India as its destination in mid-April, one of the sources said. The ​vessel was tracked despite documentation suggesting the cargo was non-Russian, the source added.

Reuters had reported in mid-April, citing LSEG shipping data, that the ​138,200-cubic-metre tanker Kunpeng was heading to the Dahej LNG import terminal in western India. The vessel is now near Singaporean waters with no destination broadcast, according to LSEG.

India, the biggest buyer of Russian seaborne crude, conveyed its decision not to buy LNG that was under sanction to Russia’s Deputy Energy Minister Pavel ​Sorokin during his April 30 visit, when he met Indian officials including Petroleum and Natural Gas Minister Hardeep Singh Puri, one of ​the sources said. It was their second meeting in as many months, and Sorokin could return in June for further talks, said the source.

India’s purchases of Russian crude have meanwhile continued unabated, aided by a temporary waiver of U.S. sanctions introduced to help countries cope with an energy crisis resulting from the U.S.-Israeli war on Iran, which began on February 28.

Arctic LNG 2 is Russia's other export plant subject to U.S. sanctions. Washington stepped ​up sanctions on the LNG ​plants in early 2025 over ⁠Russia's war on Ukraine.  

While crude oil cargoes can be hidden through ship-to-ship transfers at sea, LNG shipments are far harder to conceal from satellite tracking. 

While India is open to buying authorised ​Russian LNG, most of those volumes are committed to Europe, Reuters notes. Meanwhile, China remains ⁠a major buyer of both sanctioned and unsanctioned Russian LNG. Moscow is also seeking long-term deals to supply India with LNG and fertilizers such as potash, phosphorus and urea, the source added.

Before the Iran conflict disrupted shipping through the Strait of Hormuz, India was meeting half of its ⁠gas consumption ​through imports, about 60% of which had come through the waterway. More than ​half of its crude supplies came the same way.

Indian Prime Minister Narendra Modi on Sunday urged people to conserve fuel and foreign exchange by working from home, limiting foreign ​travel and reducing imports of gold and edible oil.