Sojitz, Sembcorp, Kyushu Electric Ink Term Sheet for India to Japan Green Ammonia

On June 6, 2024, Sojitz Corporation ("Sojitz"), Kyushu Electric Power Co. ("Kyushu Electric"), and Sembcorp Green Hydrogen Pte. Ltd., a wholly-owned subsidiary of Sembcorp Industries ("Sembcorp"), a prominent energy provider in Asia, have entered into a term sheet for the supply of green ammonia from India to a Japanese off-taker. Each party aims to progress the term sheet into a formal, legally binding agreement at a later stage.

As the global momentum toward carbon neutrality gains speed, there is an increasing drive for transitioning to clean energy sources. Starting from 2022, Sojitz initiated discussions with Sembcorp to explore collaboration across various infrastructure and emerging energy sectors with a focus on decarbonization. Leveraging India's plentiful renewable energy resources and expansive land area, price-competitive green ammonia production will be facilitated, utilizing Sembcorp's expertise and resources in project development and operations within the country. Since 2023, Sojitz, Sembcorp, and Kyushu Electric have jointly embarked on project planning endeavors to produce green ammonia for distribution to Japanese off-takers.

Under this term sheet agreement, Sojitz and Kyushu Electric will jointly undertake the production of 200,000 metric tonnes of green ammonia annually, commencing in the latter half of the 2020s, targeting the Japanese market. The green ammonia will primarily be supplied to various industrial off-takers, predominantly situated in the Kyushu region.

Through the provision of cost-competitive green ammonia, Sojitz aims to facilitate the adoption of green energy and play a role in Japan's endeavors toward decarbonization. Concurrently, Sojitz is dedicated to ensuring a reliable energy supply by diversifying the green energy provision through the creation of a new supply chain in India.

Green hydrogen, generated through the utilization of renewable energy and water electrolysis technology, is gaining prominence as a carbon-neutral, futuristic energy alternative devoid of CO2 emissions. Nonetheless, certain challenges persist, notably concerning transportation methods. Green ammonia is anticipated to rapidly proliferate for applications in thermal power generation and beyond, serving as a hydrogen carrier for green hydrogen and as a zero-emission fuel (fuel ammonia), emitting no CO2 upon combustion.

The Sojitz Group pursues dual objectives through its business endeavors. Firstly, it aims to enhance "value for Sojitz," encompassing the expansion of the Group's infrastructure and the achievement of sustainable growth. Secondly, it strives for "value for society," entailing the development of local economies and environmental preservation. With a global footprint, Sojitz operates across diverse sectors and adopts a structured approach, organized into seven divisions based on function, industry, and product type. This structure enables the company to swiftly discern societal needs and cultivate high-quality businesses. The divisions include Automotive, Aerospace, Transportation & Infrastructure, Energy Solution & Healthcare, Metals, Mineral Resources & Recycling, Chemicals, Consumer Industry & Agriculture, and Retail & Consumer Service.