Jogmec adds to Japanese exploration funding

OREANDA-NEWS.  Japan's state-owned energy agency Jogmec is continuing its financial backing for the country's upstream firms developing overseas exploration projects, providing Inpex and JX Nippon Oil & Gas Exploration with ¥22.6bn (\$190mn) for block R offshore Malaysia's Sabah.

Inpex and JX each have a 27.5pc stake in the deepwater block. Jogmec will take half of the companies' equity in return for the financing. Block R also features Malaysian state-owned oil firm Petronas with 25pc and Australian independent Santos with 20pc. Both Japanese firms last month transferred part of their stakes in the block to Santos to strengthen their upstream co-operation.

Block R covers an area of 672km in water depths of 100-1,400m, in an area where the Kikeh and the Gumusut-Kakap oil fields were discovered. The partners plan to start drilling three wildcat wells this year.

Jogmec has already provided Inpex with ¥12.3bn for its Malaysian block S project, also offshore Sabah, in return for half of the equity stake. Inpex operates the block with a 50pc interest, with the remaining 50pc equally held by Petronas and Santos.

Japanese premier Shinzo Abe's government in January approved ¥107bn as part of Japan's ¥96 trillion 2015-16 budget to fund the trade and industry ministry's efforts to enhance energy security, including ¥49bn earmarked solely for Jogmec's 2015-16 upstream financing compared with the 2014-15 budget allocation of ¥47bn.