Japan Petroleum Exploration (Japex) is recalibrating its strategic focus, prioritising investments in oil and gas exploration and production (E&P) over an aggressive expansion into renewables.
The company aims to bolster its presence in the United States and Norway through this revised strategy, driven by higher returns in the oil and gas sector.
The decision marks a significant shift from Japex’s 2022 goal to evenly split profits between E&P and other ventures by the 2030 financial year.
Company President Michiro Yamashita indicated that the current earnings contribution from E&P, which stands at 70–80 per cent, is expected to remain stable through 2030.
This adjustment aligns with a broader trend among global industry players who are scaling back investments in renewables due to lower returns.
Several factors have influenced Japex’s strategic pivot. Surging profits in the oil and gas sector, fuelled by supply disruptions stemming from the Russia-Ukraine conflict, have created a lucrative environment for E&P investments.
Furthermore, the company anticipates a more predictable and stable energy policy under a potential Trump administration in the US, which Yamashita described as “favourable” for Japex.
Japex plans to significantly increase its E&P investment, exceeding its original Y230bn ($1.5bn) plan by 1.5 times or more over the next nine years.
A key focus will be acquiring a tight oil operator in the US, with Yamashita expressing a strong desire to secure a deal this year or in 2026.
The company intends to cap investment per project at $300 million, a strategy informed by past losses on large investments.
In Norway, Japex aims to boost profits through increased production at existing projects and further exploration activities.
The company is also strategically targeting the acquisition of gas assets in line with the US plan to expand liquefied natural gas exports.
Yamashita emphasised the importance of balancing shareholder returns, financial soundness, and investment discipline as Japex navigates this strategic realignment.
While the company may consider investments in non-oil and gas segments, such decisions will be selective and based on the potential for viable returns.
