Japan and Saudi Arabia inked two sets of cooperation agreements in the domains of hydrogen, fuel ammonia, and carbon recycling, further solidifying their existing trade in crude oil-based crude oil.
The collaboration agreements represent the most recent step in Japan’s efforts to build out its extensive supply networks for fuel ammonia and hydrogen in the Middle East, where it sees enormous potential for competitive production to decarbonize the nation’s industries and power generation.
On the eve of the first round of the Japan-Saudi Arabia energy conversation in Riyadh, the agreements were signed by Prince Abdulaziz bin Salman, Saudi Arabia’s energy minister, and Yasutoshi Nishimura, Japan’s minister of economy, trade, and industry.
Following a suggestion made by the Saudi energy minister to the late Japanese Prime Minister Shinzo Abe during his visit to Saudi Arabia in January 2020 to begin the Japan-Saudi Arabia energy discussion, a ministerial-level meeting was held.
Beginning on December 25 and lasting through December 28, Nishimura’s whirlwind trip to Saudi Arabia, Oman, and Malaysia has energy security listed as one of its major priorities.
“I aim to focus on stabilizing global crude oil markets and assuring reliable LNG supplies during a visit to Saudi Arabia and Oman, which are essential countries for energy security,” Nishimura said at a news conference in Tokyo on December 23.
“I also plan to look for collaboration in such novel hydrogen and ammonia fields.”
The largest supplier, Saudi Arabia, supplies around 40% of Japan’s imports of crude oil.
In accordance with the two memoranda of cooperation, Japan and Saudi Arabia will advance the use of hydrogen in transportation and encourage the study, creation, and use of technologies utilizing hydrogen and fuel ammonia on a local, bilateral, regional, and global scale.
The two nations will also look into the possibility of conducting a joint study or pilot project to hasten the adoption of low-carbon fuels like e-fuel, gaseous fuels, methane, fuels made from CO2, and methanol as well as technologies like direct air capture, carbon capture, utilization, and storage (CCUS), or carbon recycling.
The official ministerial-level cooperation agreements came after corporate efforts, such as the first-ever shipment of blue ammonia to be transported from Saudi Arabia to Japan in 2020 for use in power production, the CO2 capturing process being planned for use in the production of methanol at the Ibn-Sina facility of SABIC, and the capturing of CO2 for enhanced oil recovery at the Uthmaniyah field of Saudi Aramco.
The Middle East’s potential ammonia production appears to be competitive.
As the primary basis for constructing its supply chain by 2030, a task team established by METI anticipated that the country’s ammonia CFR price would be $335-$339/mt from the Middle East, compared to $413/mt from North America and $429/mt from Oceania.
The Middle East, North America, and Oceania were investigated as prospective long-term contractual suppliers of ammonia as the fuel for power generation by the task group, which was composed of significant Japanese importers, trading houses, a think tank, and state-owned financial institutions.
Their research was predicated on Japan using 20% co-firing of ammonia for coal-fired power production, introducing 3 million mt/year of domestic ammonia consumption, and setting a 2030 objective for ammonia supply costs of high Yen 10s for normal cubic meters-H2.
