Japan’s 2023-24 oil, gas equity output recovers

Japan's domestic and overseas oil and gas output rose during the April 2023-March 2024 fiscal year, mostly on the back of development of LNG projects abroad.

Japan's equity output of oil and gas totalled 1.625mn b/d of oil equivalent (boe/d) for 2023-24, up by 2.9pc from the previous year's 1.578mn boe/d, according to data released by the country's ministry of trade and industry (Meti) on 3 September. The higher output was largely because of development of overseas LNG projects, Meti said, without disclosing further details.

Output possibly recovered because the US' 15mn t/yr Freeport LNG export project fully resumed loading cargoes in February 2023 after it halted operations following a fire in June 2022. Japanese offtakers, including power producer Jera and gas retailer Osaka Gas, have stakes in the project.

Increased equity output lifted the portion of Japan's total requirements to 37.2pc, up by 3.8 percentage points from a year earlier, Meti said. Japan is targeting to raise the ratio to over 50pc by 2030-31 and more than 60pc by 2040-41. Meti also attributed the output ratio increase to Japan's reduced demand for crude during 2023-24.

Japan is strengthening the government's direct involvement in upstream gas investments overseas with a more aggressive financial approach. Meti has almost doubled its request for the country's fiscal investment and loan programme (FILP) on exploring upstream opportunities for LNG and minor metals to ¥122.4bn ($844mn) for the 2025-26 fiscal year, according to Meti's preliminary data released on 31 August. FILP aims to mobilise investment in areas, which are "too risky to be funded by the private sector alone", according to the country's finance ministry.

Meti could be shifting its finance resources for upstream investment to FILP from the general account budget. The ministry cut its budget request for exploring oil and gas and/or buying related assets by more than half to ¥48.6bn for 2024-25. Financing more capital expenditure through FILP suggests that the country is strengthening its involvement in projects, since the programme requires increased profitability and involves more risks compared with allocations from the general account budget.

By Yusuke Maekawa