WASHINGTON, September 14. /TASS/. The US Department of the Treasury has authorized operations related to the maritime transportation of oil produced as part of the Sakhalin-2 project and intended for delivery to Japan until June 28, 2024. The relevant transactions were exempted from the Russian oil price cap policy.
As noted in the text of the published general license, "all transactions prohibited by the determination of November 21, 2022 made pursuant to section <…> related to the maritime transport of crude oil originating from the Sakhalin-2 project are authorized through 12:01 a.m. eastern daylight time, June 28, 2024, provided that the Sakhalin-2 byproduct is solely for shipment to Japan."
The license does not allow transactions prohibited by previously imposed restrictions against the Russian Federation, including transactions with persons subject to American sanctions, unless a separate permit from the US authorities is obtained.
Last year, Russia decided to transfer the Sakhalin-1 and Sakhalin-2 projects to Russian jurisdiction. Foreign participants were asked to provide Moscow with notifications within a month of their consent to take ownership of shares in the new operating companies in accordance with their previous distribution pattern.
Japan is the world's largest importer of LNG and receives on average about 9% of all imports of this type of fuel from Russia. This volume provides about 3% of the electricity in Japan, the third largest economy in the world. Tokyo repeatedly emphasized the importance of the Sakhalin-2 and Sakhalin-1 projects for the country’s energy security, and Japanese companies continued to participate in them even after the Russian Federation’s decision to transfer them to Russian jurisdiction. Under these conditions, Japan agreed with its G7 partners, who were imposing sanctions against Moscow, to exempt prices for oil produced under the Sakhalin 2 projects from the oil price cap policy. The project’s main product is LNG, and oil supplies are linked to gas contracts.
Price cap policy
On December 5, 2022, the European Union embargo on seaborne oil supplies from Russia came into force. G7 countries, the EU and Australia introduced a price cap on seaborne Russian oil at $60 per barrel for their subordinate ships and territories. From February 5, 2023, similar restrictions began to apply to the supply of petroleum products from Russia. The maximum cost was set at $100 and $45 per barrel, depending on the category of petroleum products. Changes to these restrictions require agreement from all EU states and G7 members.
As Deputy Prime Minister of Russia Alexander Novak announced on October 13, 2022, Moscow will not supply oil to countries that are artificially trying to limit the cost of this product through the use of a price cap. Speaking at the Russian Energy Week forum, he pointed out that the price should be formed by a market method, based on the laws of supply and demand.
Russian President Vladimir Putin emphasized in October 2022 that Moscow would not pay so that others could profit at its own expense and supply energy resources to countries that will limit their prices. He branded the introduction of a price cap on fuel from Russia as a dirty trick and shameless blackmail. Putin warned that the introduction of a cap on oil prices could lead to caps being imposed in other sectors, which would destroy the global market economy and threaten the well-being of billions of people.