The Garraf oilfield in southern Iraq has suspended production and crude shipments after the Iraqi government declared force majeure due to the Middle East war. Partner Japan Petroleum Exploration (Japex) stated there is no prospect of resuming operations and, consequently, no anticipated revenue from the project.

Field Operations and Ownership

Operations at the Garraf field began in 2013. Prior to the current shutdown, work was underway to increase output from 127,000 barrels per day in 2023 to a target of 230,000 bpd. The field is operated by Petronas, which holds a 45% stake. The remaining interest is split between the Japex Garraf consortium (30%)—comprising Japex, Japan Oil, Gas and Metals National Corporation (Jogmec), and Mitsubishi—and North Oil Company (25%).

Impact on LNG Procurement and Costs

The regional conflict is also impacting Japex's liquefied natural gas (LNG) procurement. Due to a de facto blockade of the Strait of Hormuz, the company had to purchase two spot cargoes from alternative sources to replace planned supplies from the Persian Gulf. This is expected to cause a significant rise in LNG procurement costs compared to pre-conflict levels. The LNG is used as natural gas and power generation feedstock at the Fukushima power plant, though Japex notes secured alternative supplies should prevent any disruption to gas or electricity customers in Japan.

Financial Implications and Outlook

Japex cautioned that while rising crude prices and a weakening yen could increase revenue, higher LNG costs and the suspended Garraf operations could lead to a significant decline in profits for the current financial year. The company estimates the impact on its financial results for the fiscal year ending March 2026 will be minimal. Japex plans to reveal the expected impact on its earnings forecast for the fiscal year ending March 2027 on 13 May. The company stated it will continue monitoring developments and work to ensure a stable energy supply.