Prime Minister Fumio Kishida and Crown Prince Mohammed bin Salman met this Sunday in Jeddah and signed 26 memorandums of cooperation
Fumio Kishida, Prime Minister of Japan, concluded his Middle Eastern tour from Doha on Tuesday. He sealed his country’s future for energy supplies by strengthening its ties with its largest supplier of natural resources. This was an urgent need considering China’s growing influence and involvement in the geopolitics of the region.
Prime Minister Fumio Kishida and Crown Prince Mohammed bin Salman met this Sunday in Jeddah and signed 26 memorandums of cooperation.
Their major agreements are in the fields of energy supplies, as Japan wants a smooth supply chain for its oil demand, and Saudi Arabia wants collaboration with strong nations that can help them with diversification requirements.
They have also agreed to bolster decarbonisation and energy collaboration. The two leaders have agreed to establish strategic dialogue for enhanced bilateral cooperation on a ministerial level.
Tokyo has agreed to share advanced green-energy technology with Saudi Arabia. This will prove to be a game changer for the Saudi Kingdom, which is investing heavily in clean energy to reduce its economic dependence on fossil fuels.
Tokyo purchases more than 95% of its oil from the Middle East. Saudi Arabia accounts for a third of the total imports. A secured oil supply is the need of the hour, especially after the price oscillation seen during the conflict in Ukraine.
Chinese rising influence
The concerns for securing oil supply were also due to China’s deepening relationships with the wealthy oil-producing nations and increased geopolitical influence in the Middle Eastern region, which could lead to alliances. If Japan, an ally of the United States, gets caught up in war-like situations due to a Taiwan crisis, then there can be some barriers to acquiring Gulf oil.
This fear was escalated by a blockade in energy supply restoration amidst recovering from the aftereffects of the Covid-19 pandemic. This increased Tokyo’s energy dependence on the Middle East to 97.7% in July 2022, the highest since 1952, as per statistical data published by Japan’s Ministry of Economy, Trade and Industry (METI).
China is one of the largest consumers of oil from the Middle East, making it an important trading partner. This elevated it to mediate diplomatic ties in the region. The most recent example was brokering a Saudi Arabia, and Iran deal to curtail Saudis involvement in the Yemen war. China’s famous Belt and Road initiative passes majorly through Europe and the Middle East, but it wants deeper connections in the region to expand the initiative into Africa.
China has signed two multi-year liquified natural gas (LNG) agreements with the government-backed QatarEnergy. The other deal was for the same period and amount with another Chinese oil mammoth Sinopec back in November 2022.
The China National Petroleum Corporation has signed a 27-year deal to purchase 4 million tons of LNG annually. Qatar is luring new buyers from a selected set of countries by providing LNG through huge discounts on short-term contracts. Like recently, QatarEnergy made a 15-year LNG supply deal with PetroBangla, a state-owned gas company, for exporting 1.8 million tons from 2026.
Shigeto Kondo, senior researcher at the Japanese Institute of Middle Eastern Economics, said that Qatar is a strategic player. It knows that there lies an uprising demand from East Asian nations like China, Japan, and South Korea who possess financial power too. This also puts Qatar in a powerful position to impose its terms and conditions on gas deals. It is taking advantage of the pressure on PM Kishida from Japan’s gad lobby to secure stable LNG deals.
He mentioned that Japan is having a great time conducting business with the Gulf nations, majorly after the recent strained relations over discourse between Qatar and Iran and the war in Yemen. These are creating a vacuum which Japanese businesses are taking advantage of.
Japan is a significant player in the global renewable energy product market. It also envisions a shared goal of attaining net-zero carbon emissions by the end of 2050. This aligns with a similar goal set by the United Arab Emirates, which also happens to host the COP28 United Nations climate conference in Dubai later this year.
Japan is diplomatically and politically inclined towards the United States. But, it shares similar views on renewable energy with the Gulf oil producers. Both of them promote cleaner energy solutions for tackling climate change issues, developing technological solutions for carbon capture and its utilisation. This builds a certain harmony amongst oil producers in Japan.