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Aims to buy tight oil operator business in US

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E&P investment set to exceed initial plan

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Considers Trump's energy policy "favourable"

By Yuka Obayashi

TOKYO, Feb 20 (Reuters) - Japan Petroleum Exploration ( JPTXF )

is prioritising investment in oil and gas

exploration and production (E&P) through 2030 - revising an

earlier plan to aggressively expand its renewables businesses,

its president said.

"For now, the investment focus will remain on oil and gas

exploration and production... as securing a fair return from

renewable energy sources such as offshore wind is challenging

due to rising costs," President Michiro Yamashita told Reuters

in an interview on Wednesday.

Other global peers have also scaled back renewables

investments due to lower returns. At the same time, profits from

oil and gas have soared since Russia's invasion of Ukraine

disrupted supply and propelled energy prices higher.

In 2022, Japex set a goal of having its profits split

equally between E&P and other businesses by the 2030 financial

year to support the energy transition towards carbon neutrality.

Yamashita said, however, that the current ratio of E&P

contributing 70%-80% of earnings will likely remain unchanged

through 2030, driven by expansion in the U.S. and Norway.

He added that Japex could selectively invest in non-oil and

gas segments if returns are viable.

Japex's original plan called for E&P investment of 230

billion yen ($1.5 billion) over nine years. But the company now

expects to invest 1.5 times that amount or even more as current

crude prices exceed the plan's assumed $50 a barrel by a large

margin.

"My biggest challenge now is acquiring a tight oil operator

business in the U.S. and building an investment structure for

sustainable profits," Yamashita said, adding that the company

would like to secure a deal this year or in 2026.

Investment will likely be capped at $300 million per

project, reflecting lessons from past losses on large

investments and Japex's exit from a Canadian oil sands project,

he said.

Japex wants to strike a balance between shareholder returns,

financial soundness and investment discipline, Yamashita said.

In Norway, Japex is seeking to boost profit by expanding

production at an existing project and with further exploration.

Yamashita said the Japanese company views the Trump

administration's energy policy as enhancing predictability and

stability, making it "favourable" for them.

Given Trump's plan to expand liquefied natural gas (LNG)

exports, the company aims to gradually acquire gas assets, he

said. But the Alaska LNG project, which Trump supports, is not a

realistic investment proposition due to its unclear economics

and large scale, he said.

($1 = 151.0000 yen)