Japan finalizing negotiations with U.S. to continue importing Russian LNG

TOKYO — Japan is finalizing negotiations with the U.S. Treasury Department to extend an exemption allowing companies to process transactions related to the Sakhalin 2 oil and natural gas project in Russia's Far East, in which Japanese firms hold stakes, multiple sources said Wednesday.

With a June 18 deadline approaching, the move is aimed at ensuring the continued import of crude oil and liquefied natural gas, the sources said, as shipments from the Middle East to Japan have plummeted amid a de facto blockade of the Strait of Hormuz.

While the government is exploring alternatives to the Strait of Hormuz and seeking energy supplies from regions outside the Middle East, it has determined that imports from Sakhalin 2 are indispensable to ensuring a stable energy supply.

In November 2024, the department restricted transactions involving Gazprombank, a financial institution affiliated with Russian state-owned energy giant Gazprom, as part of sanctions against Moscow over its ongoing war in Ukraine.

Transactions related to Sakhalin 2 are primarily settled through Gazprombank. Because sanctions prevented such transactions, the Japanese government repeatedly sought exemptions, which the United States has granted. The current exemption period runs for six months from December 2025.

Gazprom holds over 70 percent of the equity in Sakhalin 2, with Mitsui & Co holding 12.5 percent and Mitsubishi Corp holding 10 percent.

LNG produced under the Sakhalin 2 project accounted for 8.9 percent of Japan's total LNG imports in 2025. In May, a tanker carrying crude oil from the project entered a Japanese port for the first time since the deterioration of the security situation in the Middle East.

The United States and Europe have continued to revise sanctions on Russia amid soaring crude oil prices. In May, Britain authorized imports of petroleum products manufactured in third countries using Russian crude oil and permitted the transport of LNG from the Sakhalin 2 project to third countries.

The United States is also temporarily allowing various countries to purchase Russian crude oil.

© KYODO