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Japanese oil giants are betting on domestic gas fields due to energy cost surge

Global concerns over liquefied natural gas procurement, caused by the outbreak of the war in Ukraine in February, push Japanese oil giants to explore new domestic gas fields.

A portrait of the industry

Japan relies on imports for almost all of its natural gas needs. And LNG prices have doubled over the past year due to high resource costs and the weak yen, according to Japan’s trade statistics. In a plan approved by the government last year, the Japanese Ministry of Economy, Trade and Industry set a target to increase independent production of oil and natural gas from 35% in 2019 to over 60% in 2040. In this plan, both the domestic development and the overseas interests held by Japanese companies are calculated.

Two projects in progress

The exploration of a new domestic gas field, scheduled for November, represents a major attempt to pave the way to greater energy security for the resource-poor nation facing rising import costs. 
Japanese oil giant Inpex has already confirmed natural gas reserves in an area near the Minami-Nagaoka gas field, one of the largest in the country. The company plans to start production in 2026 if those reserves prove sufficient for commercialization.

Japan Petroleum Exploration Co. began drilling at its Katakai gas field, also in Niigata prefecture, in July and plans to start production in the second half of 2023. The Katakai gas field produced 350 million cubic meters of natural gas in fiscal 2020, but the company hopes the new development will enable it to increase supply.

Towards a twofold objective

The expansion of domestic production and overseas concessions reveals a dual function: the reduction of the burden on households and businesses and the choice to focus on natural gas, which is less polluting than other fossil fuels, to promote the decarbonisation of Japan.


Read also: Climate targets and a crucial role in the countryโ€™s economy: prospects for the Canadian oil and gas sector
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