Japex's Strategic Investment and Production Goals

Japan Petroleum Exploration (Japex) is taking a long-term approach to its gas projects while significantly boosting upstream investments. The company plans to quadruple production rates by 2035 to 180,000 barrels of oil equivalent per day, up from 45,000 boepd in 2025. To achieve this, Japex will allocate 1.5 trillion yen (US$9.4 billion) over the next decade to accelerate its exploration and production investments, aiming to ensure portfolio resilience against oil price volatility and geopolitical uncertainties.

Geographic Focus and Risk Management

Japex has selected three overseas markets—the US, Norway, and Indonesia—which are perceived as relatively independent from each other in terms of geopolitical risk. In the short term, the company focuses on US shale oil, infrastructure-led exploration in Norway, and domestic gas in Indonesia. For the long term, Japex plans to shift its overseas cash flow from oil to gas, targeting a timeframe from the mid-2030s onwards. The US shale portfolio is intended to build financial strengths that will be reinvested into gas shifts in Southeast Asia and Norway.

Domestic Gas Strategy in Indonesia

Japex is strategically focusing on domestic gas supply in Indonesia to hedge against oil price volatility. The pricing system for domestic gas is decoupled from international energy prices, though it remains low. If a project can achieve final investment decision under that price level, it gains immunity from global oil price fluctuations. Production from Japex's Gebang block onshore Indonesia, scheduled to commence in 2027, will be directed to the domestic market.

Drilling Plans and Asset Acquisitions

During its latest annual general meeting, Japex announced plans to drill approximately 50 new wells annually on operated assets, with an additional 40 wells on non-operated assets for the current fiscal year. The company is also considering acquisitions of new assets in Norway, Indonesia, North America, and other regions, though these are not included in its financial forecasts for the fiscal year.

Carbon Neutrality and CCS Model

Japex is not pivoting away from its carbon neutrality target outlined in the "JAPEX2050" plan. The company emphasizes its responsibility to pursue capital efficiency while reflecting global trends toward energy security and growing fossil fuel demand from emerging economies. Japex plans to adopt an E&P model with carbon capture and storage (CCS) for future projects, viewing it as a sustainable form of energy security and carbon neutrality. In Southeast Asia, Japex is promoting an "Asian version of carbon neutrality," combining fossil energy with CCS to concurrently achieve economic growth and carbon neutrality, tailored to the region's specific economy, geology, geography, and geopolitics.

CCS and CO2-Rich Gas Fields

Japex is currently working with partners on a carbon capture, utilisation, and storage (CCUS) and enhanced oil recovery (EOR) project at the Sukowati oilfield in East Java, Indonesia. Commercialisation is anticipated in the next few years, following a successful inter-well pilot test in 2024. Regionally, CCS is driven not only by decarbonisation incentives but also by field development considerations, as sweet gas fields have already been developed and exploration is shifting to CO2-rich fields.

Gas Demand Outlook in Asia-Pacific

Japex's optimistic view of gas projects is fueled by expected demand growth in the Asia-Pacific region. Southeast Asia is projected to be a main driver of gas demand increase, driven by economic growth and the coal-to-gas energy transition. On the supply side, a