THE LANDSCAPE OF BUSINESS GROWTH FOR OIL AND GAS UPSTREAM COMPANIES: A CASE FROM JAPAN

Fumihiko Matsubara

doi:10.32479/ijeep.8240

Abstract

Why is Japan, the 4th largest oil consumer in 2016, unable to develop a globally competitive oil and gas upstream company? This paper suggests that the Japanese government should merge two oil companies, which are both under governmental control, Inpex and Japex. The analysis revisits the 2008 debate on strategies between CERA, an esteemed energy consulting company in the US, and a group of Japanese scholars. CERA suggested that Japanese energy companies should acquire a large equity stake upfront in new exploration projects and sell to new investors as the potential identified by exploration grows. Alternatively, a group of Japanese scholars suggests Japanese energy companies should acquire oil and gas upstream projects that are close to the end and adapt Japanese technology for increased and enhanced oil recovery. Desk research and interviews with four experts were conducted for this study and it was found that both strategies are necessary.Keywords: Japanese oil and gas upstream companies, Growth of businessJEL Classifications: Q40, Q48DOI: https://doi.org/10.32479/ijeep.8240

Highlights

Scholars and practitioners in Japan have been debating why Japan could not develop a globally competitive oil and gas upstream company
In 2006, Jackson and Hobbs (2006) of CERA made the recommendation for Japanese oil and gas companies to acquire exploration projects, with as large a participation ratio as possible, from export-oriented national oil companies (NOCs) directly or from underperforming companies
Shun et al, (2014) pointed out that Non-operated ventures (NOVs) are a key part of the investment portfolio of upstream entities. It has been more than a decade since two groups of scholars advocated two different strategies which point to different directions, and yet Japanese oil and gas upstream companies are still struggling to become top performing oil and gas companies

Summary

INTRODUCTION

Scholars and practitioners in Japan have been debating why Japan could not develop a globally competitive oil and gas upstream company. After the Fukushima disaster, Japan’s energy policy needed to be reconstructed based on the question of what role nuclear power should play in Japan (Duffield and Woodall, 2011; Joskow and Parsons, 2012; Vivoda, 2012). Renewable energy sources have received a significant amount of attention (Moe, 2012; Huenteler et al, 2012) This is because hydrocarbons, such as crude oil and natural gas, are one of the underlying causes for greenhouse gas (Duffield and Woodall, 2011). The author has 20 years of experience in a variety of energy business segments, and has long been facing the question: Why is Japan unable to develop a globally competitive oil and gas upstream company? The author has 20 years of experience in a variety of energy business segments, and has long been facing the question: Why is Japan unable to develop a globally competitive oil and gas upstream company? Japanese energy companies, especially oil and gas upstream companies, have a vital role to play in securing oil and gas for Japan’s economy

REVIEW OF THE STATUS-QUO IN THE

Private Companies

Private oil and gas upstream companies

DISCUSSION AND ANALYSIS

Findings

CONCLUSION