Eneos Holdings, Inc., Japan’s biggest refiner, announced Monday it would buy Japan Renewable Energy (JRE) for $1.8 billion to expand its low-carbon businesses. The deal would help Eneos accelerate its goal to have net-zero emissions by 2040.
Eneos will buy JRE from Goldman Sachs and Singaporean sovereign wealth fund GIC.
The Eneos – JRE deal marks the first major purchase of a renewables company by a top Japanese oil major.
Eneos – Japan Renewable Deal
The acquisition of JRE by Eneos would help the latter meet its target of having over 1,000 megawatts (MW) of renewables in Japan and overseas by March 2023.
Lately, Japan’s oil and gas giants have ventured more into the renewables sector, much like global industry leaders like Royal Dutch Shell¸ especially after Tokyo announced it aims to cut down more emissions earlier this year.
“As the world moves toward a decarbonized and circular society, this acquisition will mark a key turning point to fundamentally transform our business structure,” Keitaro Inoue, Eneos’ senior vice president, told a news conference.
The $1.8 billion acquisition amount is “appropriate,” given JRE’s asset size and ability to develop a wide range of renewables including solar, wind and biomass. Inoue said the deal will also help the company boost its renewable assets portfolio.
Founded in 2012, JRE has 708 MW in renewable energy assets including those under construction on an equity basis. Once the deal is finalized, Eneos’ assets will reach 1,200 MW.
Given its production capacity, JRE is less likely to be much of an immediate contributor to Eneos’ annual sales of around $90 billion.
The Eneos – JRE deal points to the former’s intent to move switching out fossil fuels. Japan is set to double its official targets for renewable energy supplies as the world’s third-largest economy.
As of today, Eneos controls half of the local market for gasoline and other fossil fuels, however, for many years its customer base is shrinking due to an aging population.
