The Next Front in LNG Sanctions Runs Through China

China is becoming the indispensable lifeline for Russia’s sanctioned liquefied natural gas (LNG) exports. Between August 2025 and June 2026, the southern Chinese port of Beihai received more than 40 cargoes from Russian LNG projects under U.S. sanctions. Offered to Chinese buyers at discounts reportedly reaching 30 percent to 40 percent below prevailing Asian spot prices, these cargoes represent more than isolated acts of sanctions evasion. Together, they point to the emergence of a sanctions-resistant LNG trading system.

That system would not exist without solving two problems: moving sanctioned LNG out of Russia and finding a reliable destination for it. Russia addressed the first by developing a maritime logistics chain. Floating storage units, dark ship-to-ship transfers, and a growing shadow fleet now allow LNG from sanctioned projects to reach Asian waters. But maritime logistics alone are not enough.

Without receiving terminals, the cargoes have nowhere to go. China has provided that missing link. Before accepting its first cargo, Beihai stopped importing LNG from other suppliers, effectively segregating sanctioned Russian deliveries from the rest of China’s LNG import network and limiting the exposure of other terminals and suppliers. Beihai appears to be only the first step. The newly built Longkou terminal is expected to begin receiving similar cargoes later this year, suggesting that Beijing is not simply buying discounted LNG but also expanding the infrastructure needed to sustain Russia’s sanctioned exports.

That was the outcome that Washington sought to prevent. When the United States sanctioned the Arctic LNG 2 project in 2023, it targeted the cornerstone of Russia’s long-term LNG strategy: its flagship LNG project, led by the country’s largest private gas producer and developed with international partners. The project was expected to almost double Russia’s LNG export capacity.

The sanctions slowed its development, but they did not stop Russia from adapting. As China’s import infrastructure expands, sanctioned Russian LNG is finding new routes to market despite those restrictions. And Asia’s role, particularly China’s role, is soon likely to become even more important.

As the European Union phases out imports of Russian LNG after 2027, Moscow will have little choice but to redirect a growing share of its exports to Asia, one of the few markets with the infrastructure to absorb additional Russian volumes. That will make terminals such as Beihai and Longkou increasingly central to Russia’s export strategy.

At the same time, U.S. LNG liquefaction capacity is expected to expand by 30 percent by 2027 as new export projects come online, presenting a timely opportunity to align commercial and foreign-policy interests. This creates an opportunity to constrain Russian LNG exports while opening more of the Asian market to growing U.S. supplies.

Imposing stricter sanctions would not only strengthen the credibility of U.S. economic statecraft but also limit Russia’s ability to develop a sustainable LNG export industry capable of competing with growing U.S. exports to Asia. But tightening sanctions alone will not be enough, as their enforcement must also evolve. If Washington wants to prevent Russia from building a durable LNG export industry while preserving the strategic advantage of expanding U.S. LNG exports, sanctions enforcement will have to evolve.

The immediate task is to sustain pressure on the vessels already transporting sanctioned LNG. The Trump administration should resume designating vessels involved in Russia’s sanctioned energy trade, including LNG carriers. No new Russia-related vessels have been designated since President Donald Trump returned of the White House, even as Russia’s LNG shadow fleet has expanded. U.S. sanctions have proved highly effective in the oil sector, where 70 percent of OFAC-designated tankers ceased carrying Russian oil. Maintaining that pressure on Russia’s emerging LNG shadow fleet remains essential.

But enforcement cannot stop there. The more important objective is to prevent Russia from expanding its LNG shadow fleet in the first place. Since 2024, the fleet transporting sanctioned Russian LNG has grown from just nine identified vessels to 23.

Rather than waiting for new vessels to enter sanctioned trade, the U.S. Treasury should move further upstream by applying anti-money laundering and know-your-customer principles to the sale, financing, and insurance of LNG carriers. Shipowners, brokers, banks and insurers should be required to identify the ultimate buyer, scrutinize ownership structures, and assess whether a transaction carries a credible risk of facilitating sanctioned Russian LNG exports before approving a sale. Companies that have no track record in LNG shipping or were incorporated shortly before acquiring LNG carriers should automatically trigger enhanced due diligence. Where that risk cannot be satisfactorily mitigated, secondary sanctions should extend to those facilitating the transaction.

However, the decisive point of leverage lies not at sea but onshore. Unlike sanctioned Iranian oil, which relied largely on independent Chinese refiners, Russian LNG exports are becoming increasingly integrated into infrastructure operated by the state-owned China Oil and Gas Pipeline Network Corporation (PipeChina). Both terminals that are receiving, or expected to receive, sanctioned Russian LNG—Beihai and Longkou—are operated by PipeChina. According to the International Gas Union’s World LNG Report 2026, China has 36 LNG import terminals, and PipeChina operates eight of them, making it one of the country’s largest LNG infrastructure operators.

PipeChina’s importance extends well beyond Russian LNG. It handles cargoes from suppliers around the world and operates within a broader commercial ecosystem of international banks, insurers, brokers, traders, and LNG suppliers that remains exposed to Western financial markets and the U.S. dollar.

That gives Washington a different kind of leverage. Rather than targeting Russian cargoes alone, measures directed at PipeChina would raise the commercial, financial, and compliance risks for companies using its infrastructure, making continued engagement increasingly difficult to justify.

Targeting PipeChina would almost certainly trigger a response from Beijing. Over the past five years, China has built a legal framework that allows it to block companies operating in China from complying with foreign sanctions; impose countermeasures on foreign entities that enforce them; and restrict exports of strategic materials, including critical minerals and rare earths.

Yet recent experience suggests that those measures do not eliminate the deterrent effect of secondary sanctions. Following the imposition of U.S. sanctions on Hengli Petrochemical, Western brokers suspended dealings with its Singapore trading arm. Similarly, after the European Union and United Kingdom sanctioned Shandong Yulong Petrochemical, major international suppliers and service providers withdrew from commercial relationships.

The objective would therefore not be to force Beijing to abandon Russian LNG, but to make PipeChina a far less attractive commercial partner for Western companies, weakening the international commercial ecosystem that sustains Russia’s sanctioned LNG exports.

That leverage is unlikely to remain as effective indefinitely. Washington still has a narrowing window of opportunity. The coming expansion of U.S. LNG exports and Russia’s growing dependence on Asian markets create a timely opportunity to align commercial interests with foreign policy. Stronger sanctions enforcement would reinforce the credibility of economic sanctions as a tool of U.S. statecraft, sustain pressure on Russia’s energy revenues, and reduce Moscow’s ability to establish a durable LNG export industry that competes with the United States in Asia.