Japan Petroleum Exploration Co (Japex) said its new long-term business plan, unveiled on Monday, was based on the assumption that it would retain its stake in Sakhalin-1 oil and gas project in Russia.
Japanese Consortium, Sakhalin Oil and Gas Development (SODECO), holds a 30% stake in the Sakhalin-1 project from which Exxon Mobil has announced its exit. Japex holds 15.285% of SODECO. Russian oil The Rosneft company is also a partner in the project.
“Our new business plan includes a contribution from Sakhalin-1, although it does not represent a significant share as production is expected to decline,” Masahiro Fujita, chairman of Japex, told a news conference on Monday.
He also said state-backed Japex was unlikely to make new investments in Russian energy projects given the current crisis in Ukraine.
For Japex, the Sakhalin-1 project is expected to contribute 10 billion yen ($81 million) to the company’s estimated trading profit of 29.8 billion yen for the current fiscal year to March 31.
The move by Exxon, which has operated the Sakhalin facility since production began in 2005, casts doubt on the fate of a multi-billion dollar liquefied natural gas (LNG) facility project.
“There had been a plan to convert the gas to LNG for export, but with Exxon’s exit, we can’t say what will happen,” Fujita said.
Under the new business plan over the next nine years, Japex aims to increase its annual profit to 50 billion yen by March 2031, up 68% from this year, by investing a total of 450 billion of yen in growth areas, including 230 billion yen in oil and gas exploration and production.
“We want to take a stake in oil and overseas gas projects, primarily in the United States and the North Sea,” Fujita said.
When asked if Japex was looking for new concessions in case it loses its stake in Sakhalin-1, Fujita said, “Whether the project goes ahead or not, we are exploring various possibilities for new overseas concessions.” adding that there were no intentions to replace the Sakhalin-1 concession with something else.
($1 = 124.0500 yen)
(Reuters – Reporting by Yuka Obayashi; Editing by Edmund Blair and Jane Merriman)