WASHINGTON, June 26. /TASS/. The US has authorized oil supplies from the Sakhalin-2 project to Japan until June 28, 2025, according to an updated general license published by the Department of the Treasury.
"All transactions prohibited by the determination of November 21, 2022 <…> related to the maritime transport of crude oil originating from the Sakhalin-2 project <..> are authorized through 12:01 a.m. eastern daylight time (7:01 am Moscow time - TASS), June 28, 2025, provided that the Sakhalin-2 byproduct is solely for importation into Japan," the document reads.
Meanwhile, the general license does not authorize any transactions otherwise prohibited by restrictions against Russia imposed earlier, including transactions involving any person blocked pursuant to the US sanctions, unless separately authorized by the US authorities.
In 2022, 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, adding that the price should be formed by a market method, based on the laws of supply and demand.