Inpex to conduct exploratory gas drilling off west Japan

Japan's biggest oil and gas explorer Inpex Corp will conduct exploratory offshore drilling off western Japan from March to July in the hope of finding natural gas, the company and a ministry of industry official said.

The project, off the Yamaguchi and Shimane prefectures, if successful, is expected to help improve the country's energy self-sufficiency rate, Inpex said in a statement on Monday.

It will be the first offshore exploration in Japan since a gas project, off Niigata prefecture in central Japan, operated by Japan Petroleum Exploration, started production in 1990, the ministry official said on Tuesday.

For Inpex, it will be the first offshore gas exploration in Japan since a project off the coast of Fukushima prefecture in northern Japan produced gas between 1984 and 2007, a company spokesperson said. Under a basic energy plan approved by the cabinet in October, resource-poor Japan aims to raise its rate of self-sufficiency for oil and gas, including stakes held by Japanese companies in overseas upstream projects, to 60per cent or more by 2040 from 34.7per cent in 2019.

The government has conducted some geophysical exploration and evaluation on the Yamaguchi/Shimane area since the 2000s, which raised expectation gas resources are there, the ministry official said.

Inpex declined to comment on the cost of the work but the ministry official said that, including analysis and evaluations over the next few years, it was expected to cost 33 billion yen ($288 million), half of which will be subsidised by the state-backed Japan Oil, Gas and Metals National Corp (JOGMEC).

If sufficient quantities of gas and the economics necessary for commercialisation are proven, the project is expected to produce about 900,000 tonnes of gas a year and boost Japan's domestic self-sufficiency rate of gas to 3.4per cent from 2.2per cent now, the official said.