Japan, Russia sign agreements for hydrogen, ammonia cooperation, Kamchatka LNG reloading

Japan signed Sept. 2 a series of energy cooperation deals with Russia spanning renewables to hydrogen and ammonia, as well as reaching a basic agreement to participate in the Kamchatka LNG reloading and storage terminal project, as it strives to accelerate efforts toward carbon neutrality while ensuring immediate supply.

The series of agreements took place on the sidelines of the Eastern Economic Forum in Vladivostok, and included a joint statement between the Japanese Minister of Economy, Trade and Industry Hiroshi Kajiyama and Russian Energy Minister Nikolay Shulginov.

The joint statement outlined bilateral cooperation in areas including renewable energy, hydrogen, fuel ammonia, carbon capture and storage, carbon capture utilization, and carbon recycling, a METI official said.

METI also signed a memorandum of cooperation with Russia's Novatek on hydrogen, ammonia, CCS, CCU and carbon recycling. The agreement covers production and marketing of ammonia and hydrogen as well as implementing CCS technology in Russia and Japan, Novatek said separately.

"The memorandum expands inter-governmental support for our climate projects that is of great importance for the successful implementation of Novatek's strategic plans to further increase LNG production while correspondingly reducing our carbon footprint," Novatek CEO Leonid Mikhelson said in a statement.

Novatek also signed a strategic cooperation agreement with the state-owned Japan Bank for International Cooperation on low-carbon projects.

"The parties intend to cooperate on projects to produce hydrogen and ammonia, carbon capture, utilization, and storage technologies, as well as renewable energy projects in Russia, including ammonia and hydrogen production projects on the Yamal Peninsula," Novatek said.

Japan's signing of cooperation agreements with Russia is the latest in its efforts to deploy large-scale hydrogen and ammonia supply chains after signing similar deals with the UAE, as well as marking the first ministerial level cooperation on fuel ammonia.

Participating LNG reloading facility

Japan's Mitsui O.S.K. Lines said it signed a letter of intent with Russia's State Transport Leasing Co., or GTLK, on MOL's participation in the Kamchatka and Murmansk LNG reloading and storage terminal projects, by potentially taking a 49% stake in the floating storage units currently wholly owned by GTLK.

The two FSUs, which would have the world's largest storage capacity of about 360,000 cu m, will be placed at each of Bechevinskaya Bay in the Kamchatka Territory and Ura Bay at Murmansk after being built.

The latest development comes as Japan more broadly considers participating in LNG reloading and storage terminals, including the one planned on the Kamchatka Peninsula, as part of its efforts to diversify supply sources and expand the Asian LNG market, a Japanese government official told S&P Global Platts Sept. 30, 2020.

For Japan, participating in the Kamchatka reloading and storage terminal project marks a milestone for securing a new LNG supply route, which could enhance its energy security as well as help drive LNG trades in Asia.

Japanese investors will provide refinancing for the construction of the FSUs, GTLK said, adding that transportation and transshipment of LNG at the transshipment complexes in Kamchatka and in the Murmansk region will significantly reduce the costs of carriers and will contribute to the development of the Northern Sea Route.

The latest pact followed the inking of a cooperation agreement in September 2019 between MOL, JBIC and Novatek for LNG transshipment projects on Kamchatka and in Murmansk, and on constructing FSUs to transship LNG cargoes from ice-breaking LNG carriers to conventional LNG ships.

Russian LNG producer Novatek, which operates the 16.5 million mt/year capacity Yamal LNG project, is developing a transshipment terminal on Kamchatka to facilitate the distribution of Russian LNG to Asian markets.

LNG from the Yamal LNG and Arctic LNG 2 projects will be transshipped at the site from Arc7 ice-class tankers to conventional ships, significantly reducing costs and shipping times. Novatek is aiming for year-round shipping via the Northern Sea Route to be available for LNG exports to Asia in 2023-24.

Novatek plans to launch the first train of the 19.8 million mt Arctic LNG 2 project in 2023, the second in 2024, and the third in 2025. Production at Yamal LNG started in 2017.