Japan plans to sign an agreement with Saudi Arabia next month to facilitate Japanese investment in the world’s biggest oil producer to help secure overseas energy resources at lower costs, a government source said.
The plan will coincide with Prime Minister Shinzo Abe’s visit to Saudi Arabia in early May and comes as the nation struggles to cover the loss of nuclear energy following the Fukushima disaster.
Under the accord, Saudi Arabia is to give Japan most-favored-nation status, benefiting energy-resource and other Japanese companies operating in the country. For its part, Tokyo will allow Saudi firms to operate more smoothly in Japan.
Each government will back business activities with deregulation and other steps, while setting some rules, including on intellectual property rights protection. Abe will also promote Japanese exports of infrastructure, including medical and railway systems.
The agreement will help Japan “secure resources at cheaper costs,” the source said.
Japanese utilities have increasingly sought fossil fuels to increase thermal power generation. Increasing expenses for fuel imports, particularly liquefied natural gas, have put pressure on their earnings and the trade balance. The weakening yen is worsening the situation.
Saudi Arabia is the biggest provider of crude oil to Japan, accounting for 30 percent of its total imports in 2011.
Abe will also visit Russia, the United Arab Emirates and Turkey during his Golden Week trip starting April 28. He will be accompanied by a number of business leaders.