Japan's ENEOS signs MOU with Aramco to develop hydrogen, ammonia supply chain

Tokyo — Japan's largest refiner ENEOS said March 25 it signed a memorandum of understanding with Saudi Aramco to consider development of a CO2-free hydrogen and ammonia supply chain as it accelerates efforts to develop hydrogen production, transport and sales businesses.

Under the MOU, which was ENEOS' first of its kind with a Middle Eastern producer, the two companies will conduct a year-long feasibility study looking at means of hydrogen production and transport options, an ENEOS spokeswoman said.

During the feasibility study, ENEOS and Saudi Aramco will jointly look at Aramco's hydrogen production derived from feedstocks such as natural gas and LPG as well as capture and storage of its associated CO2 from production, ENEOS said.

The companies will also look at means to transport hydrogen including in forms of ammonia and methylcyclohexane (MCH) from Saudi Arabia to Japan and other consumers.

Japan imported the maiden blue ammonia cargo in 2020 from Saudi Arabia 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.

Ammonia -- three hydrogen atoms and one of nitrogen and, thus, about 18% hydrogen by weight -- releases no carbon emissions when combusted in a thermal power plant.

ENEOS said it signed its MOU with Saudi Aramco because Saudi Arabia, where Japan imports more than a third of its annual crude oil consumption, has a long term and stable supply potential.

Following an outcome of the feasibility study, ENEOS said it intends to import hydrogen and its related products with an eye to supplying hydrogen for power generation at its refineries as well as local companies.

With its expertise and infrastructure of automobile fuels supply, ENEOS has said it intends to speed up its efficient development of hydrogen production, transport and sales businesses.

Green strategy

Japan formulated its carbon neutral 2050 strategy in December, with aims to produce 3 million mt/year of hydrogen by 2030 and 20 million mt/year by 2050 by accelerating developments of international supply networks as well as cultivating demand in various sectors.

The Green Growth Strategy for 2050 Carbon Neutral includes plans for ammonia, following the carbon neutrality target announced by Prime Minister Yoshihide Suga in October.

Japan has estimated its demand for fuel ammonia in the power and shipping sectors will be 30 million mt/year -- equivalent to 5 million mt/year of hydrogen -- in 2050 after introducing it commercially in the 2020s by developing new supply chains, according to a policy report released Feb. 8 by the Ministry of Economy, Trade and Industry.

METI is bringing attention to Japan's need to develop new fuel ammonia supply chains because there won't be enough ammonia supply once the country starts using it as a fuel even just for co-burning it 20% with coal, which would be 20 million mt/year -- equivalent to the current global ammonia trade.

METI in January struck the first fuel ammonia cooperation deal with UAE's state-owned Abu Dhabi National Oil Co. as Tokyo intends to develop its supply chain of blue ammonia possibly in the Middle East by the late 2020s.