Japan – “A Friend Indeed”

Chief Executive Officer

It is 40 years since Qatar has establishing full diplomatic relationship with Japan and in the formative years of the Qatari state post-1972, Japanese companies secured contracts to build the port at Ras Laffan that now fuels much of the Qatari economy and in 1996, when the first shipment of liquefied natural gas (LNG) left the port, it went to Japan. Japan today is Qatar’s largest trading partner. As part of their long-term relationships Qatar and Japan can work on new areas apart from hydrocarbon segment. Since Qatar embarked on a massive energy infrastructure development and construction plan, leading Japanese companies have played a key role in the planning and execution of such projects. Japan’s trade with Qatar, its 3rd largest trading partner among the GCC countries, increased by 36.49% to $31.2 bn in 2011. 70 percent of cars on the roads of Qatar are Japanese and 40 percent of those are Toyota. The volume of gas imports from Qatar rose by 44.47% to 15.83 million tons in 2011 from 10.98 million tons in 2010. Other exports from Qatar were aluminum, organic chemicals, iron and steel plastics and fertilizers. The long term relationship has reflected that Japan had been a friend indeed for Qatar.

Recently Japanese utility Kansai Electric Power Co announced it had signed a contract with the world’s top LNG producer Qatar gas to buy 500,000 tons per year (tpa) of liquefied natural gas (LNG) for 15 years from January 2013. The deal, which is in addition to an existing contract for 290,000 tpa for 23 years from 1999 to 2021, was signed with Qatargas 3. The move comes as the company has been increasing spot LNG purchases from Qatar to fill the void of nuclear power it had lost following the massive March 2011 earthquake and tsunami that devastated Tokyo Electric Power Co’s Fukushima Daiichi nuclear plant.Tokyo Electric Power announced in June 2012 that it has signed a new contract with Qatar gas to purchase 1 million tons per year of LNG from August 2012.

The value of two-way trade between Japan and the GCC countries grew 32.5% in 2011 to $162.2bn, compared to $122.4bn in 2010. This growth was attributed to an increase in the price as well as the volume of mineral fuels that Japan imported from the GCC countries during the year. While Japan’s imports from the GCC countries surged 39.4% to $142.6bn in 2011, her exports to the GCC registered a decline of 2.2% to $19.6bn from $20.1bn in 2010.Japan’s trade deficit with the six-nation bloc of the GGC countries thus increased by 49.5% to $122.9bn in 2011, compared to $82.3bn in 2010.Japan imported a total of 987.7 million barrels of crude oil from the GCC in 2011, compared to 991.5 million barrels in 2010. Motor vehicles remained to be Japan’s top export commodity in 2011. The value of motor vehicles exported to the GCC stood at $10.03bn in 2011, compared to $11.62bn in 2010.Japan’s machinery exports to the GCC countries, the 2nd largest commodity of export to the GCC, surged by 24.08% in 2011 to $3.47bn supported by increased demands for different kinds of pumps, compressors, derrick cranes, gas or steam turbines etc. The next major commodity of export to the GCC was rubber products, mostly, new tyres. Japan exported rubber products worth $1.19bn to the GCC countries in 2011.

Japan has a high quality small and medium enterprise sector which is supported by infrastructure and an educated workforce. Japanese companies are looking for partners rather than direct investment. One area of focus or Japan is joint ventures involving large scale projects. Two Japanese companies – Mitsubishi and Hitachi – both won the ‘priority negotiation rights’ for the construction of the largest desalination plant in Qatar. There are more than 30 Japanese companies in Qatar such as Itochu Corp, Nissho Iwai. Japanese shipping lines including NYK Lines, Mitsui O.S.K. Lines and Iino Shipping with their profound experience and expertise in the field of LNG transportation, has made it possible for those lines to serve as stakeholders and/or operators of Qatar’s first 10 vessels.