Japex says 2020-2021 overseas crude sales to drop 92% on year on Iraqi oil field outage

Tokyo — Japan Petroleum Exploration said Thursday it expects its fiscal 2020-2021 (April-March) overseas crude sales to drop 92% year on year to just 90,000 kiloliters, or 566,082 barrels, amid uncertainty over the restart of the Gharraf oil field in Iraq.

Japex's overseas crude sales, which had a significant boost in the previous fiscal year from its increased sales from the Gharaff field, are forecast to drop in the fiscal year to March 2021 as it currently only counts the sales from Canada and the US.

The Japanese upstream company does not expect to lift any of its Iraqi equity crude until December 2020 as part of this forecast as it remains unclear when the Gharaff oil field production will be restarted, Japex officials said Thursday.

Gharraf field

Production at the Gharraf oil field in southern Iraq was suspended on March 16 after Baghdad closed all airports as part of its measures against the coronavirus pandemic.

But Japex loaded 1 million barrels of Basrah Light crude at the end of March after having previously loaded 2 million barrels of Basrah Light crude on December 18.

Production at the Gharraf oil field dipped to an average of around 93,000 b/d in January due to delays in drilling work, but stakeholders remained committed to raising the output to 230,000 b/d by the end of 2020, Japex officials said February 10.

The Gharraf field started production in August 2013 under a technical service contract with Iraq's South Oil Co. The consortium consists of Petronas, with a 45% stake, Japex Garraf, with 30% and North Oil Co., with 25%. Japex holds a 55% stake in Japex Garraf, with state-owned Japan Oil, Gas and Metals National Corp. holding 35% and Mitsubishi 10%.

Canadian bitumen

For fiscal 2020-2021, Japex expects to post a net loss of Yen 3.193 billion ($29.89 million), compared with a Yen 26.815 billion net profit in the fiscal year to March 31 due mainly to plummeting Canadian diluted bitumen prices, coupled with the absence of Iraqi crude sales.

The sharp drop in oil prices has pushed Japex-operated Hangingstone leases in Alberta to produce around 15,000 b/d currently, compared with its initial production plan of 24,000 b/d for for the fiscal year to March 2021, a Japex official said.

West Canadian Select at Hardisty was assessed at an outright price of $8.03/b on April 1, marking the lowest level for the Canadian heavy sweet crude benchmark since S&P Global Platts launched the assessment of the grade on April 3, 2006.

During fiscal 2019-2020, Japex sold 1.123 million kl or 7 million barrels, triple from a year earlier, due mainly to increased sales from the Gharaff field, with its diluted bitumen sales rising 39% year on year to 1.639 million kl or 10.3 million barrels.

Japex also sold 304,000 kl or 1.91 million barrels of domestically produced crude oil in the fiscal year ended on March 31, up 16% from a year earlier.