Japan is looking to invest in blue and green ammonia development projects in the US and Australia under a strategy to control the entire ammonia value chain and reduce costs in the long run, executive vice president of Clean Fuel Ammonia Association (CFAA) Shigeru Muraki told Argus.
Tokyo considers ammonia as a strategic energy resource like oil and gas. Japan is seeking to establish a global ammonia value chain of 100mn t/yr by 2050 and take full control over the supply chain to meet its growing demand and tap potential demand growth in Asia under a strategy roadmap that was drawn up at a public-private council to achieve the country's decarbonisation goal.
This is the first time that Japan has formed a public-private partnership to co-operate in a major fuel transition. CFAA, a group of Japanese and overseas firms, state agencies and global research institutions, aims to co-ordinate efforts by companies from various industries that are involved in the entire value chain, with government financial, regulatory and diplomatic support in launching a scheme for the new fuel.
"We want a structure where Japanese firms participate in an entire value chain including the upstream part and can reduce overall costs. Ammonia offers the possibility," Muraki said in an interview on 26 February.
Muraki, who is also executive advisor for utility Tokyo Gas, compared the joint public-private effort to usher in fuel-use ammonia with Japan's shift to LNG more than 50 years ago — something that was carried out as a purely private-sector initiative. Tokyo Gas and fellow utility Tokyo Electric Power in 1969 started importing 960,000 t/yr of LNG from the Alaska LNG project in the US under a 15-year agreement with ConocoPhillips, followed by imports from Brunei in 1972 and Indonesia in 1977.
The government later urged and assisted Japanese energy firms to acquire upstream gas and LNG assets as part of efforts to secure stable supply and enhance energy security as the fuel's role and import volume grew. But majors and national oil companies have dominated access to profitable upstream assets, while Japanese firms acquired only limited upstream shares in new LNG projects. These are mostly in Australia such as the Ichthys, Queensland Curtis LNG (QCLNG) and Gorgon projects.
Public-private backing
"It gave us a big help that the trade and industry ministry launched a council to prompt collaboration between the government and private industries in introducing ammonia as a fuel," Muraki said, referring to the speed of the policy development process — particularly in the last 18 months — after Japan started the discussing possible use of ammonia as a fuel in 2013.
New blue and green ammonia development projects on the US Gulf coast, such as Texas and Louisiana, and in Australia and maybe Chile, offer attractive investment environmental and business transparency, Muraki said. A number of Japanese firms have agreed on joint feasibility studies to develop blue and green ammonia and hydrogen projects overseas, including Australia, New Zealand, Malaysia and Russia.
Japan is also keen to work with Middle East oil-producing countries to develop ammonia supply chain projects as part of its strategy to maintain strong ties and secure stable oil supply, he said. In contrast to US and Australian projects based on a private business partnership, diplomatic relations will also have to be taken into consideration for Middle East projects. The Middle East supplied more than 90pc of Japan's crude oil imports last year.
Muraki is personally interested in ammonia development in Oman, which has potential as a green ammonia supplier because of its ample solar and wind resources. Ammonia supply from Oman can also be delivered without passing through the strait of Hormuz, he added. Japanese trading house Sumitomo in January launched a feasibility study to develop a hydrogen supply chain in Oman.
Japanese demand for ammonia fuel is likely to be initially met with grey ammonia, depending on its availability and cost, as the country prioritises the quick establishment of a market for ammonia. Muraki expects it will take several years for a large-scale blue ammonia project to reach commercialisation and start new supply, including the carbon capture and storage (CCS) process.
Tokyo is considering financial support for costly CCS, prompting Japanese firms to invest in more upstream oil and gas development, as well as in development of ammonia and hydrogen value chains that include the upstream part of the chain.
Hub plans
CFAA is mulling plans for a hub terminal that can import green and blue ammonia on dedicated ammonia carriers and distribute it on coastal vessels to distant industrial consumers, in line with the transport ministry's strategy to develop a carbon-neutral port at the country's six key ports. Three of the six ports — Tokuyama-Kudamatsu in western Japan's Yamaguchi prefecture, Niigata on Japan's northwest coast and Onahama on the northeast coast — hold the potential for a hub as they already have infrastructure and host major industrial complexes, according to Muraki.
But Muraki ruled out domestic production of blue ammonia for fuel use using LNG as a feedstock because of its high costs and limited land availability for CCS. High renewable power prices will also make domestic output of green ammonia unworkable for use as a fuel, particularly thermal fuel.
CFAA was launched in 2019 to develop a value chain of blue and green ammonia for fuel use and help achieve a decarbonised society. The group is expected to work out international standards for the fuel use of ammonia, as well as a certification scheme for the footprint of an ammonia supply chain, over the coming years in the run-up to the expected start of Japanese fuel-use ammonia imports by 2025.
Shigeru Muraki is among the speakers at the Argus Green Ammonia Live – Virtual Conference, which takes place on 24-25 March. For details of the conference programme and registration, please visit www.argusmedia.com/green-ammonia
