Investment by big Japanese firms in upstream oil and gas developments is set to fall by about 40% to about 1.2 trillion yen (US$11 billion) in 2016-2017 due to current low prices, a government energy white paper showed on May 17.
The upstream investments by 10 firms including Inpex Corp., JX Holdings, Mitsubishi Corp. and Mitsui & Co. had already slipped from 2.1 trillion yen in 2014-2015 to 1.9 trillion yen in the fiscal year ended in March, the trade ministry said.
The other firms surveyed are Japan Petroleum Exploration (Japex), Cosmo Energy Holdings, Idemitsu Kosan, Itochu Corp., Marubeni Corp. and Sumitomo Corp.
Globally, top oil companies have struggled to cope with a roughly-55% decline in oil prices since their 2014 peak, triggering a wave of spending cuts on new wells and projects to conserve cash.
International Energy Agency (IEA) Executive Director Fatih Birol said last month that global upstream investment fell by 24% in 2015 and is set to fall by 18% in 2016. This would be the first time that the upstream investment has fallen for a second straight year since the 1980s, he said.
Birol said annual global upstream investment needs to be at about US$630 billion a year to compensate for declining output at existing fields and maintain current production levels.
(US$1 = 109.0100 yen)