China receives first shipment of Arctic LNG 2 ahead of Putin’s visit, data show

China this week received its first cargo of liquefied natural gas from a sanctioned Russian project, tracking data from Kpler and LSEG ships showed, days ahead of Russian President Vladimir Putin’s meeting with Chinese President Xi Jinping.

Putin is among more than 20 world leaders, including Indian Prime Minister Narendra Modi, who will attend the Shanghai Cooperation Organization summit in the northern Chinese port city of Tianjin on Sunday and Monday, where he is expected to meet with Xi to revive trade between the countries.

The meeting is expected to mark another diplomatic blow for Russia, which has been hit with sanctions from the United States and the European Union over its full-scale invasion of Ukraine in 2022, after Putin held talks with U.S. President Donald Trump in Alaska earlier this month about a potential peace deal.

The tanker Arctic Mulan LNG, which was carrying LNG from the sanctions-subject Arctic LNG 2 project, docked at China’s Beihai LNG terminal in the southern Guangxi region on Thursday, according to data from Kpler and LSEG. The cargo came from a storage facility in the Russian Far East that has only received cargoes from Novatek’s Arctic LNG 2 project.

This delivery marks the first time the project’s supercooled fuel has reached an end user since it began operating last year.

“China and Russia are testing the waters,” Anne-Sophie Corbeau, a research fellow at Columbia University’s Center for Global Energy Policy, said in a post on LinkedIn.

If this project is approved without any reaction from the U.S., it could be a signal to China and other buyers that it would be okay to acquire sanctioned Arctic LNG 2 cargoes. India could be next on the list for a Russian LNG cargo, especially at an attractive price.

PipeChina, the operator of the Beihai LNG terminal, did not immediately respond to a request for comment.

The Arctic Mulan is still located near the Beihai LNG terminal. Reuters has not been able to find contact information for its registered owner or its vessel or commercial manager.

“It could have a political green light, and it is unlikely that Russia and China will proceed without some kind of guarantee that these cargo deliveries will not generate sanctions risks for the terminal operator or lead to greater consequences for Russia,” said Siamak Adibi, director of gas and LNG supply analysis at consultancy FGE.

The Arctic LNG 2 project was to become the largest LNG plant in Russia, with a final production of 19.8 million metric tons per year of LNG from three trains.

“If sanctions on Arctic LNG 2 are lifted, an additional 12 million tonnes per year of LNG could reach the market in a relatively short period, providing additional supply relief,” Adibi said.

(Reporting by Emily Chow; additional reporting by Sam Li in Beijing; editing by Florence Tan and Christian Schmollinger)