Japan’s biggest oil refiners are following the latest trend among Big Oil to return to focus on fossil fuel supply.
The top oil refiners in Japan have recently announced lower investments in low-carbon fuels, including ammonia and hydrogen, amid slower uptake and higher costs of green energy solutions, Reuters reports, citing company executives.
For example, Eneos Holdings, the biggest refiner in crude import-dependent Japan, has seen costs for ammonia and green hydrogen soar and make capital expenditure (capex) planning more challenging, chief executive Tomohide Miyata said at a news conference this week.
In its new medium-term strategy to 2028 unveiled this week, Eneos removed a goal to supply 4 million metric tons of hydrogen by 2040, with a vaguer ambition of “considering hydrogen production, transportation, and supply to industrial and transportation operators in Japan for the establishment of a large-scale hydrogen supply chain.”
Eneos will also aim to strengthen and expand its LNG business as demand for LNG is expected to increase until around 2040.
“The trend toward a carbon-neutral society is slowing, and the full-scale bifurcation of the energy transition, previously expected around 2030, may be delayed,” Miyata said at the news conference, as carried by Reuters.
Idemitsu Kosan, Japan’s second-largest refiner, is reducing its investment in low-carbon fuels such as synthetic fuels, ammonia, and hydrogen from $6.8 billion (1 trillion Japanese yen) to $5.5 billion (800 billion yen) by 2030, president Noriaki Sakai said.
The Japanese oil refiners are seeing the decarbonization momentum slowing amid soaring costs for green energy solutions and the need for energy security, especially in large and entirely crude import-dependent economies such as Japan.
The pivot to fossil fuels in Japan echoes the recent reallocation of capital and strategic shifts at the major European oil and gas firms, which returned to focusing, valuing, and promoting their core business of oil and gas production after a few years of struggling with poor returns in their renewable energy endeavors.
By Charles Kennedy for Oilprice.com
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