Japan’s Taiyo Oil has imported its first cargo of Russian oil since early 2023, taking delivery of 600,000 barrels of Sakhalin Blend crude. This move aims to ensure stable liquefied natural gas (LNG) supplies from the Sakhalin 2 project, which accounts for about 10% of Japan’s LNG requirements.
The cargo arrived at Taiyo’s Kikuma refinery and was tracked by S&P Global Commodities. Sakhalin Blend is a light, sweet crude generated as a byproduct of LNG production.
It is exempt from the G7 price cap on Russian oil, reflecting its vital role in supporting LNG production. Sakhalin Energy, the project operator, is primarily owned by Russia’s Gazprom, with minority interests held by Japanese companies Mitsui & Co. and Mitsubishi Corp. A spokesperson for Taiyo Oil indicated that accepting this crude oil would bolster Japan’s energy security and enable steady LNG supplies.
The crude tanker Voyager, which transported the oil, had set off from Prigorodnoye in Sakhalin on May 29. Although the vessel is on the Office of Foreign Assets Control’s sanctioned ships list, Taiyo Oil believes there is an agreement between Japanese and U.S. authorities mitigating the risk of secondary sanctions for this transaction.
Notably, this marks Japan’s first import of Russian crude since January 2023 when the country received 747,706 barrels of the same grade. Currently, despite Japan’s exemption from sanctions, Northeast Asian refiners could potentially purchase Sakhalin Blend crude below the G7 price cap due to falling global oil prices.
Nevertheless, refiners such as ENEOS and SK Innovation have chosen to avoid Far East Russian crude altogether, seeking to evade potential complications associated with trade and logistics.