U.S. Treasury extends sanctions exemption for transactions related to Russia's Sakhalin 2 project

On the 11th, the U.S. Treasury Department announced that it would extend exemption from sanctions on Russia until December 18th in connection with the Sakhalin 2 oil and gas development project in Russia's Far East. Japan will continue to receive supplies of liquefied natural gas (LNG) and crude oil from Sakhalin 2. Mitsui & Co. and Mitsubishi Corporation are participating in Sakhalin 2. For Japan, it is an important base for procuring LNG. In response to Russia's invasion of Ukraine in 2022, the United States tightened sanctions against Russia. However, transactions related to Sakhalin 2 were not subject to sanctions, and the deadline was approaching on the 18th of this month. The U.S. Treasury says that sanctions will only apply if Sakhalin 2 by-products (LNG and crude oil) are imported into Japan. Due to the nature of the Sakhalin 2 gas field, crude oil is also produced at the same time. If local crude oil tanks become full, LNG production will also be affected. For this reason, not only LNG bound for Japan but also crude oil are not subject to sanctions. Regarding sanctions on Russia, the United States and Europe are moving toward easing sanctions one after another in response to soaring oil prices due to the deteriorating situation in the Middle East. The British government allowed the import of petroleum products produced in third countries using Russian crude oil, and the United States temporarily allowed other countries to purchase Russian crude oil. [Satoshi Yamaguchi]