Japan Petroleum Exploration Co. said May 13 it expects to more than double its equity crude oil sales to 935,000 kl or 5.88 million barrels in fiscal year 2022-23 (April-March), up from 357,000 kl in the previous fiscal year due mainly to increasing sales of Iraqi and US crude.
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In Iraq, the operator of the Gharraf oil field in which Japex holds a stake, Malaysia's Petronas, is working with the Iraqi government to bring about a production capacity boost that has been delayed by pandemic impacts coupled with some local security concerns.
"It is true that our investment target, or a production increase has been delayed unfortunately," Michiro Yamashita, Japex director and senior managing executive officer, told an earnings press conference.
"Petronas, the operator, is holding various talks with the Iraqi government as it proceeds its development works, and it is being worked on to raise the production capacity appropriately," Yamashita said.
Output at the Gharraf field, located in southern Iraq, had been set to rise to 230,000 b/d by the end of 2020. It produced around 130,000 b/d in April, up from an average of 100,000 b/d over January-March, a company spokesman said separately.
While declining to elaborate on the timelines for reaching the 230,000 b/d output target, Yamashita told S&P Global Commodity Insights that "the most sensible production plan" is under discussions. He said this takes into consideration the impact of the coronavirus pandemic on oil demand and current OPEC+ oil production quotas.
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%.
Japex, meanwhile, expects its US tight oil production to rise to 880,000 barrels in FY 2022-23, up more than seven times from 120,000 barrels, as it expands its upstream investments, Yamashita said.
Japex will invest about $500 million from 2022 to 2024 to develop tight oil interests in the southern US, including existing assets and interests to be acquired later this year by its US subsidiary.
Japex said its investments in the wellbore interests acquired in Texas and Oklahoma will start raising its tight oil production from the middle of this year.
Japex entered US tight oil development in 2012 by acquiring development interests in the Eagle Ford formation in Middle McCowen, southern Texas. Since then the company has continued to invest in its assets, including the acquisition of additional interests in the same formation in 2013.
In the previous fiscal year ended March 31, Japex pulled out of its operated oil sands project and a shale gas project in Canada, putting an end to its oil and gas projects in the country as part of its business portfolio review.
It sold its shares in Japan Canada Oil Sands, or JACOS, which was wholly owned by its subsidiary Canada Oil Sands, or CANOS, to Alberta-based HE Acquisition Corp., ending its involvement in Canadian oil sands that started in the 1970s.
Meanwhile, Japex plans to raise its LNG sales by 23% year on year to 363,000 mt in FY 2022-23, up by 68,000 mt year on year, as it had deferred the scheduled procurement of a spot LNG cargo in the previous fiscal year because of high spot LNG prices.