Gas sale at 40% discount: Why is Russia selling LNG at deep discounts and how it may provide a sigh of relief for India?

Russia is seeking to leverage a global natural gas supply crunch to lure energy-starved South Asia into purchasing shipments from its US-sanctioned facilities, reported Bloomberg quoting its sources.

The shipments were being offered at a 40% discount to spot prices last week via little-known intermediary companies based in China and Russia, reported Bloomberg. The sellers said that they could provide paperwork to make it appear that the shipments originated from non-Russian sources, like Oman or Nigeria, the people said.

Read more: India expects US to extend waiver on Russian oil imports amid global energy volatility

Why is Russia providing discounted LNG?

The effective closure of the Strait of Hormuz, along with attacks on Qatar’s largest LNG export facility, has choked nearly a fifth of global supply—disrupting the gas market and driving up prices.

At the same time, Russia has been steadily ramping up exports from its US-sanctioned projects, Arctic LNG 2 and Portovaya. However, most buyers remain cautious about lifting these cargoes due to fears of potential retaliation from Washington. So far, China has been the only country importing sanctioned Russian LNG, using a network of shadow fleet vessels.

Also Read: What Trump’s 39‑day war achieved: A Hormuz trophy for Iran

Expanding shipments to markets beyond China would allow Russia to diversify its customer base and boost exports from its blacklisted projects. Arctic LNG 2—envisioned as Russia’s largest LNG facility—began exports in 2024, but its full capacity has been constrained by limited shipping availability and a shortage of willing buyers.

Recently, the Kremlin said that there were a huge number of requests for Russian energy from a range of different ⁠places amid a grave global energy crisis that was shaking the foundations of the oil and gas markets. Still, there are limits on the windfall for Russia, and economists inside Russia have repeatedly cautioned that 2026 could be a tough year.

Russia ran a budget deficit of 4.58 trillion roubles, or 1.9% of gross domestic product, in January-March 2026, the finance ministry said on Wednesday. And Ukraine's attacks on Russian energy infrastructure, with an aim to cripple Moscow's finances, have also contributed to lower earnings and threaten oil production cuts.

How will it help India?

India typically takes a conservative approach to importing sanctioned oil and gas, and its government has previously said that it won’t take Russian LNG from blacklisted projects. India bought its first Iran oil shipment since 2019 following a US Treasury general license issued last month that waived restrictions.

India expects the United States to extend its waiver on the purchase of Russian oil in order to help bring down global crude prices, Reuters reported citing a government source on Wednesday.

India’s crude oil imports from Russia surged 90% in March compared with February, even as overall oil imports declined nearly 15% due to supply disruptions in West Asia, according to a report cited by industry data and compiled by Atul Mathur in The Times of India.

The South Asian nation is reliant on imported oil, and became a major buyer of discounted Russian crude following the invasion of Ukraine in early 2022. However, India sharply cut back purchases from late last year, turning instead to barrels from Saudi Arabia and Iraq, much of which then became trapped inside the Persian Gulf after the outbreak of the war.