TOKYO May 15 Some Japanese oil companies have
raised their capital investment plans for the year that started
on April 1, putting money into refineries and other downstream
projects, while others have focused on cutting spending on
exploration and production.
The offset of the refinery expenditures and some large
upstream developments has lifted the planned total investments
by Japan's five refiners and developers to 1.24 trillion yen
($10.9 billion) for the 2017/18 fiscal year, up 0.3 percent from
the previous year, Reuters calculations showed.
That compares with a 15 percent drop the previous year as
the companies continued to deal with domestic oil consumption
that has been in decline since a peak hit in 1999 due to a
shrinking population and adoption of other energy sources.
"With the decline in gasoline use due to hybrid vehicles and
so on, the oil industry is in a tough environment where they
have to tackle supply surplus and face smaller margins," said
Kaname Gokon, strategist for commodities brokerage Okato Shoji.
Adjustments to oil plants to meet those domestic market
realities look to be driving some of investments.
Idemitsu Kosan on Monday, for example, raised
investment plans for the 2017/18 year by 38 percent to 98
billion yen because of a large scheduled plant maintenance.
And while Japan's biggest refiner, JXTG Holdings,
is curbing investment by about 30 percent over the next three
fiscal years to around a total of 1 trillion-1.1 trillion yen,
it is prioritising the mid to downstream, or refining, sectors.
JXTG, formed on April 1 by a merger of JX Holdings Inc and
TonenGeneral Sekiyu KK, is cutting its aggregate
upstream investments roughly by half during the next three years
to around 300 billion yen.
"In the upstream sector we will carry out investment in a
limited number of low-risk projects," JXTG Holdings President
Yukio Uchida said.
Inpex Corp likewise is cutting its exploration
expenditures by 50 percent, while boosting development spending.
Globally, an oil price slump that began in mid-2014 has
caused top oil companies to curb upstream investments and
drastically cut costs.
Cosmo Energy Holdings has said it will raise its
capital investment by 6 percent, but Director Kenichi Taki
projected a steep decline in spending in the business year from
April 2018 as main investments such as for an offshore oilfield
in Abu Dhabi, come to a breather.
Both Cosmo and JXTG said they expected investment figures to
drop in the years following this one after a temporary rise in
spending for ongoing large projects.
($1 = 113.6100 yen)
(Reporting by Osamu Tsukimori; Editing by Tom Hogue)