United States Excludes Oil For Japan From Russia's Sakhalin-2 From Price Cap.

Oil from Russia's Sakhalin 2 energy project bound for Japan will be excluded from  a price cap the United States will introduce as part of an effort to squeeze revenue from Moscow for its war in Ukraine, the Treasury Department said in its guidance released Tuesday. 

The price cap, which other members of the Group of Seven and Australia have  agreed to introduce, comes into effect on December 5 for crude oil. on the Sakhalin 2 project, which the government regards as an important source of energy  for the country, which is poor in natural resources.

As for the level of the price cap, a senior Treasury official said talks between European Union members are taking place before the full international "price cap coalition" can announce them. 

Under the direction of the Treasury Department, American persons are permitted to provide a range of services, including financing, insurance and shipping, for the sea transportation of Russian oil only if the oil is purchased at or below the maximum price. Application of the maximum price begins when a Russian company sells crude  oil for shipment through its first sale to an onshore buyer. 

This means that once the Russian oil has been declared in a jurisdiction other than Russia, the maximum price  does not apply to other sales on land.

But if Russian oil is returned to the water after customs clearance without being "substantially transformed", such as through refining, the price cap under the guidelines still applies. The exceptions include sea transport of crude oil. 

Sakhalin-2 oil as long as the product is "only intended for import into Japan," he said. The approval for the Russian project is valid until September 30th. Natural gas project was launched and Russia approved investments by Japanese trading houses Mitsui & Co.

and Mitsubishi Corp. Russia accounted for about 3.6 percent of Japan's total  oil imports last year, according to government data. In addition to the Union, the G-7 consists of Great Britain, Canada, France, Germany, Italy, Japan and the United States.