UK Updates Russia Energy Sanctions Framework: New Trade Licences, Extension of Sakhalin-2 Exemptions and Targeting of LNG Shipping Networks

On 1 October 2026, the UK announced a package of Russia-related sanctions measures targeting the energy sector. As well as designating LNG tankers, individuals and a company affiliated with one of Russia’s largest natural gas producers,[1] the package includes: (i) two new General Trade Licences authorising certain UK involvement in shipments of Russian LNG from the Sakhalin-2 project to Japan and South Korea respectively; and (ii) an extension of existing Sakhalin-2 related exemptions until 31 December 2026.

These measures demonstrate the UK’s continued efforts to restrict Russian energy revenues while keeping targeted authorisations in place. Those authorisations are intended to support the energy security of strategic partners as they diversify away from Russian energy sources.

New general trade licences for the Sakhalin-2 Project

The Office of Trade Sanctions Implementation (“OTSI”) has published two General Trade Licences, allowing UK businesses to supply or deliver LNG from the Sakhalin-2 project by ship from Russia or a third country to Japan and South Korea respectively. The licences also permit related financial, brokering and legal advisory services. They apply only to LNG supplied under contracts concluded before 17 June 2025, and will be available between 1 January 2027 and 31 March 2028. It is important to note that transactions with designated persons are not authorised under these licences.

Extension of exemptions relating to Sakhalin-2

The Office of Financial Sanctions Implementation (“OFSI”) has extended the Sakhalin-2 exemption in General Licence INT/2025/5635700 and General Licence INT/2022/2470156 until 31 December 2026. These licences permit (i) the supply or delivery of Russian oil by ship from Russia to a third party, or between third countries, and the provision of related services, for specific listed projects or exempted countries; and (ii) the continued transactions with Gazpromneft-Sakhalin LLC and its subsidiaries where the business relates to a listed project. The Sakhalin-2 exemption was last extended in June 2025, and expired in June 2026.

Commentary

The package reflects a calibrated approach to Russia energy sanctions. While the UK has increased pressure on Russia’s LNG sector through new designations targeting LNG transportation networks, it has simultaneously preserved targeted authorisations for qualifying Sakhalin-2 transactions involving close partners, albeit within time limits to keep businesses on their toes.

For energy businesses, compliance assessments should therefore consider both the scope of the restrictions and whether any licences, exemptions or transitional arrangements may be available. The applicability of any such licences does not negate the need to ensure full compliance with its conditions and record-keeping obligations, failing which could lead to licensing breaches, costly investigations and reputational risks (which have become an increasingly important consideration in light of the recent name-and-shame enforcement policy).

 

[1] Sanctions Notice.