Japex Shifts Focus Back to Oil & Gas Amid Rising Renewable Costs

Japan Petroleum Exploration (Japex) is prioritizing oil and gas exploration and production (E&P) investments through 2030, scaling back earlier plans to expand into renewables due to rising costs.

President Michiro Yamashita told Reuters that securing returns from offshore wind and other renewables remains challenging. With oil and gas profits soaring since Russia’s invasion of Ukraine, Japex joins global peers in reassessing renewable investments.

Initially, Japex aimed for a balanced profit split between E&P and other sectors by 2030. However, Yamashita now expects E&P to continue generating 70%-80% of earnings, supported by U.S. and Norwegian expansions. While non-oil and gas investments remain an option, they will only proceed if viable.

Japex originally planned ¥230 billion ($1.5 billion) for E&P over nine years but now expects to invest at least 1.5 times that amount, given crude prices far exceed the assumed $50 per barrel. The company is actively seeking to acquire a U.S. tight oil operator to secure long-term profits, targeting a deal this year or in 2026.

Investment per project will be capped at $300 million to maintain financial discipline, following past losses, including Japex’s exit from a Canadian oil sands project. In Norway, the company plans to expand production and pursue new exploration opportunities.

Japex also sees potential in acquiring liquefied natural gas (LNG) assets, aligning with Trump’s energy policies, which the company considers favorable for stability. However, it deems the Alaska LNG project unrealistic due to its uncertain economics and scale.

Yamashita emphasized Japex’s commitment to balancing shareholder returns, financial stability, and disciplined investments while adapting to evolving energy market dynamics.