TOKYO, December 19. /TASS/. The Japanese government is currently in discussions with local oil refineries to buy oil produced as part of the Sakhalin-2 project, Reuters reported on Monday, citing sources.
Sakhalin-2 is a project for the production of liquified natural gas (LNG).
"The government is sounding out top refiners to buy oil from the Sakhalin-2 to make sure LNG supply from the project can continue," one of the sources told Reuters.
According to a second source, the authorities are discussing such an option with companies that had previously been involved in such activities.
As noted by Reuters, the oil, a byproduct at the LNG plant, needs to be shipped out regularly for production to continue.
According to the news agency, a potential restart of Russian oil imports by Japan is not likely to upset its allies in the G7 as they have agreed to exempt Sakhalin-2 oil from the price cap placed on Russian crude exports this month.
Japan halted purchases of oil and oil products from Russia in June of this year. After that Tokyo bought a small amount in July and August, and then again completely stopped importing these types of energy resources in September.
As a Japanese official explained to TASS, the Sakhalin-2 project provides almost 9% of Japan's consumption of LNG, which is almost entirely used to generate electricity, providing 3% of its generation in the country.
Embargo, price cap and insurance ban
On December 5, an embargo on maritime oil supplies from Russia to the European Union came into force. The EU, the Group of Seven (the UK, Germany, Italy, Canada, USA, France, Japan), as well as Australia, agreed on a price cap for Russian oil supplied by sea at $60 per barrel. The US, EU and UK are banning their companies from providing transport, financial and insurance services to tankers carrying oil from Russia at a price above the agreed level.
However, in late November, the United States Department of the Treasury allowed operations related to the sea delivery of oil from the Sakhalin-2 project to Japan until September 30, 2023. They were removed from the price cap policy. Earlier, the EU made a similar decision, setting the expiration date for this exemption until June 5, 2023.
The Japanese government introduced a price cap for Russian oil, but it will not affect the products of the Sakhalin-2 project. The country's Foreign Ministry said in a statement that such a decision was made for reasons of national energy security.
On December 4, Russian Deputy Prime Minister Alexander Novak said that the Russian Federation would not sell oil under a price cap, even if it meant cutting production, as this is unacceptable and contrary to market rules and the World Trade Organization.