Russia Energy Dependence Lowers in Japan... Mitsui Participates in Middle East LNG Development

Japan, the world's second-largest importer of liquefied natural gas (LNG), is reportedly participating in a Middle East LNG development project to reduce its dependence on Russian energy. It is expected that diversifying LNG supply sources will enhance energy security.

The Nihon Keizai Shimbun (Nikkei) reported on the 24th that "Mitsui & Co. is expected to participate in the LNG development project in Ruwais, western United Arab Emirates (UAE)." LNG refers to natural gas cooled to an extremely low temperature and liquefied. When burned, it emits less carbon than coal or oil, making it a rising fuel in the era of net zero (carbon neutrality).

According to the report, the total project cost for the UAE Ruwais LNG development is $7 billion (approximately 9.6 trillion KRW). In addition to Mitsui & Co., Abu Dhabi National Oil Company (ADNOC), Shell, BP, and other European energy companies are participating. Mitsui & Co.'s shareholding ratio is about 10%, with an estimated investment of several tens of billions of yen (approximately several hundred billion KRW). The goal is to operate the plant in the late 2020s to around 2030. The Ruwais LNG production capacity is about 10 million tons (t) per year.

Since the Russia-Ukraine war in 2022, energy security has rapidly increased, and the decision to reduce dependence on Russian energy is the background for participating in the Middle East LNG development project, Nikkei analyzed. It has been about 20 years since a Japanese company participated in a Middle East LNG development project, the last being the Qatar LNG development project in 2005. Japan imports all of its LNG. Last year, Japan's LNG imports amounted to 66 million tons, ranking second in the world.

Ruwais LNG is scheduled to be exported to Asia and Europe, with German and Chinese companies given priority. However, Nikkei added that there is speculation that Japan may consider selling LNG to Japan as well by participating in the Ruwais LNG development project.