China maintains Arctic LNG 2 imports, despite UK sanctions

The PipeChina-operated Beihai LNG Terminal is the dedicated recipient of cargoes from Russia’s sanctioned Arctic LNG 2 project. It recently received its eleventh shipment, with more on the way. On 15 October, the UK imposed the first targeted sanctions on the terminal. However, neither the US nor the EU followed suit in their sanctions packages later in the month. The impact of the UK measures is therefore expected to be minimal, with no sign of Arctic LNG 2 sanctions enforcement by the US. 

China successfully ‘quarantined’ the Beihai terminal before its first Arctic LNG 2 delivery, in anticipation of potential secondary sanctions. Beihai stopped receiving long-term Australian LNG cargoes in July and has exclusively imported from Arctic LNG 2 since late August.  

Beihai LNG Terminal imports by origin region (kt, LHS) and Russia share (%, RHS) 

Why Beihai Terminal was chosen for sanctioned cargoes

The selection of Beihai as the entry point for blacklisted cargoes reflects its manageable risk profile. The terminal is located in the southwestern Guangxi province, which is the smallest gas consumer among China’s LNG-importing regions. Its demand was just 4.5 bcm (3.3 mt) in 2024, compared with a national total in excess of 400 bcm. So any LNG supply curtailment would have limited implications for the wider market and China’s energy security.  

Moreover, the reach of any attempts at sanctions enforcement will be constrained by market opaqueness and complexity. Downstream transactions for regasified volumes, or trucked LNG, will be difficult to trace. 

Guangxi’s gas supply mix also offers flexibility and resilience. Despite the region’s modest demand, it has links to two of China’s major gas supply corridors: the Sino-Myanmar and West–East pipelines. It also benefits from high renewables penetration. Thermal power accounts for only 37% of Guangxi’s power mix, well below the national average of 67%. 

The 6 mtpa Beihai facility was designed to serve as a balancing hub for surrounding provinces. It is southwest China’s only large-scale LNG terminal and one of the country’s 10 largest LNG storage sites, with tank expansion to 1.04 million cbm ongoing. Through PipeChina’s network, it supplies neighboring provinces such as Yunnan and Guangdong and, during peak winter demand, can deliver gas further north. 

Arctic LNG 2 deliveries (0.6 mt to date) are still only a small part of China’s overall LNG imports and will not be critical to its short-term balance. As winter approaches, and Russia’s Northern Sea Route closes, the main uncertainty will be whether the Arctic LNG 2 fleet and associated logistics are sufficient to sustain seasonal flows at close to their recent level.