The agreements primarily focus on the areas of the circular carbon economy and carbon recycling, as well as green hydrogen, fuel ammonia and derivatives, state-owned Saudi Press Agency (SPA) said on Monday.
Both sides stressed the importance of ensuring global oil markets remain stable through continued collaboration between oil-producing and consuming countries, it said.
The agreements were signed by Prince Abdulaziz bin Salman, Saudi Arabia's Minister of Energy, and Nishimura Yasutoshi, Japan's Minister of Economy, Trade and Industry, during the first ministerial meeting of the Japan-Saudi Energy Ministerial Dialogue in Riyadh.
The two countries “highlighted the need to ensure secure supplies of all energy sources in global markets, noting that the kingdom continues to be Japan’s largest source of reliable crude oil supplies and its reliable and trusted partner”, the SPA said.
“In order to realise a carbon-neutral society, it is necessary to focus on emissions rather than energy source through effective deployment of the carbon circular economy and carbon recycling technologies,” it added.
Saudi Arabia, the Arab world's biggest economy and the world's top oil exporter, has continuously played a leading role in the global energy sector and promoted sustainable practices, such as the circular carbon economy.
A circular carbon economy is a framework for managing and reducing emissions, using a closed-loop system involving the so-called 'four Rs' — reduce, reuse, recycle and remove, said Saudi Aramco, the world's biggest oil exporter.
A circular economy, in general, is an economic system that focuses on reducing the extraction of natural resources, minimising waste and regenerating natural systems. Raw materials, components and products keep their value for as long as possible, while renewable energy sources are used in a circular economy.
The kingdom aims to develop a “closed loop system”, which will help restore carbon balance and contribute to global economic growth in a sustainable manner, Prince Abdulaziz said in October.
Carbon recycling, meanwhile, is the process of suppressing emissions and repurposing them for the creation of other materials and even fuels. The technology is not expected to be widespread until 2030, said the International Energy Agency, citing Japan's Ministry of Economy, Trade and Industry.
Saudi Arabia counts Japan, the world's third-largest economy, as a key partner as it boosts its focus on the East. The Asian nation imports about 90 per cent of its energy and is the world’s top importer of liquefied natural gas this year, data from Statista shows.
State-owned Aramco accounts for about 40 per cent of Japan's total crude oil imports, the company's website said. More than 60 per cent of the company's shipments go to Asia, with China, Japan, South Korea and India being the biggest buyers.
Japan is also Saudi Arabia's third-biggest trading partner, with exports worth 39.1 billion Saudi riyals ($10.4 billion) as of the second quarter of 2022, trailing India and China, latest government data says.
Earlier this month, Aramco and China Petroleum and Chemical Corporation signed an initial agreement to build a refinery and a petrochemicals plant in the world's second-largest economy, part of the kingdom's push to boost its presence in the continent.
Saudi Arabia and Japan said the investments of the latter's companies in the kingdom’s energy market is helping diversify global supply chains through localisation strategies, the SPA said.
The two sides also discussed more potential collaboration in petrochemicals. Riyadh recently announced major plans to expand the Saudi petrochemical industry through liquid-to-chemical conversions, as well as by maximising integration across the industry's value chain.
“Moreover, both sides express their desire to carry on co-operation in electricity, renewable energy, energy efficiency and innovation,” the SPA said.