Japan PM to visit Saudi Arabia, UAE, Qatar to bolster energy ties

Japanese Prime Minister Fumio Kishida is to visit Saudi Arabia, the UAE and Qatar as part a whirlwind tour starting July 16 aimed at enhancing energy cooperation with the country's key suppliers of oil and LNG.

During his visit until July 18, Kishida will hold meetings with the leaders of these countries to discuss a wide range of topics, including the situation in Ukraine, and confirm bilateral cooperation in energy and other areas, Japan's Ministry of Foreign Affairs said July 13.

The delegation will be accompanied by an economic mission with the aim of expanding business opportunities for Japanese companies, MOFA said.

Kishida is visiting Jeddah July 16, which will be followed by visits to Abu Dhabi July 17 and to Doha July 18.

Kishida's visit to Saudi Arabia and the UAE comes as Tokyo has been working to expand its current ties primarily based on buyer-supplier of crude oil to hydrogen and ammonia in recent years.

Crude oil from Saudi Arabia and the UAE accounted for 76.2% as top two suppliers of Japan's total crude imports average in 2022, with the former supplying 38.2% and the latter accounting for 37.9% of the total, according to the Ministry of Economy, Trade and Industry data. Qatar also supplied 7% of Japan's crude imports as the fourth largest supplier in 2022.

Saudi Arabian cooperation

Kishida's visit to Saudi Arabia followed a visit by the Minister of Economy, Trade and Industry, Yasutoshi Nishimura, in December when Japan signed two sets of cooperation agreements in the fields of hydrogen, fuel ammonia and carbon capture, utilization and storage/carbon recycling, strengthening the current relationship primarily based on buying and supplying crude oil.

The cooperation agreements were the latest in Japan's efforts to develop large-scale supply chains of hydrogen and fuel ammonia in the Middle East, where it sees a potential in competitive production for decarbonizing the country's power generation and industries.

The formal ministerial-level cooperation agreements followed efforts at corporate levels, including the world's first transport of a blue ammonia cargo in 2020 from Saudi Arabia to Japan to be used for power generation, with the CO2 capturing process designated for use in methanol production at SABIC's Ibn-Sina facility, as well as capturing CO2 used for enhanced oil recovery at Saudi Aramco's Uthmaniyah field.

In October, the Japan Organization for Metals and Energy Security signed a memorandum of cooperation with Saudi Aramco on hydrogen and fuel ammonia developments, under which JOGMEC will actively consider providing risk money for projects involved with hydrogen and ammonia production in Saudi Arabia.

Japan's largest refiner ENEOS said in March 2021 that it signed a memorandum of understanding with Aramco to consider development of CO2-free hydrogen and an ammonia supply chain as it accelerates efforts to develop hydrogen production, transport and sales businesses.

UAE prospects

Since 2021, Abu Dhabi National Oil Co. has been stepping up ties with Japan and working on ammonia and hydrogen deals with the Asian country.

In April, ADNOC and Kawasaki Heavy Industries signed an agreement to explore opportunities for joint production and transportation of liquefied hydrogen to potential offtakers.

INPEX, IHI Corp. and Mitsui OSK lines also completed in July 2022 the transport of a clean ammonia cargo to Japan from the UAE.

In June 2022, ENEOS and Mitsui agreed with ADNOC to launch a joint study to evaluate the development of a large commercial 200,000 mt/year clean hydrogen supply chain between the OPEC producer and Japan. The project aims to export blue hydrogen from the UAE to Japan in the form of methylcyclohexane (MCH) as a carrier once developed.

In 2021, Mitsui and South Korea's GS Energy agreed to take stakes in a 1 million mt/year blue ammonia plant being developed at ADNOC's industrial hub of Ruwais in the emirate of Abu Dhabi.

In 2021, ADNOC also sold blue ammonia cargoes to INPEX, Idemitsu and Itochu.

INPEX also wants to explore the commercial potential of a clean ammonia production business in Abu Dhabi in cooperation with ADNOC, JERA and JOGMEC.

Qatar LNG

Kishida's visit to Qatar marks the first in a decade by a Japanese premier and comes at a time when Japan faces an increased need to diversify its LNG import portfolio, given the uncertainty over Australia as a long-term LNG supplier following policy changes in the country.

Australia's share of Japanese LNG imports rose to 42.7% in 2022 from 35.8% the previous year, due in part to the expiry of Japanese companies' long-term LNG contracts with the Qatargas 1 project in 2021. Qatar's share of Japanese LNG imports conversely shrank to 4% in 2022 from 12.1% the previous year.

A couple of Japanese companies are in negotiations with Qatar for LNG supply contracts as well as participation in Qatar's North Field expansion project, S&P Global Commodity Insights reported July 3.