Japan's Japex seeks UK North Sea exit with oilfield stake sale

Japan Petroleum Exploration Co

17/10/2024 10:56

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      Japex seeks buyers for its 15% stake in Seagull oil and
gas
field
    

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      Says exploring options for UK operation
    

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      Companies exiting ageing North Sea for more lucrative
fields
    

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      UK government tax plans also weighing on sector  
    

  
    By Ron Bousso and Arunima Kumar
       LONDON, Oct 17 (Reuters) - Japan Petroleum Exploration
(Japex)  1662.T  is seeking buyers for its stake in an oilfield
in the British North Sea, the latest in a string of exits from
the ageing basin as companies face growing uncertainty over
government tax plans.
    Japex is calling for bids for its 15% interest in the
BP-operated Seagull oil and gas field, according to a document
seen by Reuters.
    "We are exploring all possible measures to enhance the value
of the UK operation, and it (a potential exit) is one of the
options under consideration," a Japex spokesperson told Reuters
in an emailed statement, adding that no decision has been made
yet.
    Japex acquired the stake in the field in 2014. Seagull
started production in 2023, and is expected to produce around
50,000 barrels of oil equivalent per day at peak output.
    Japex said in the document it is considering exiting its UK
upstream position via either the sale of its local unit or the
sale of its stake in Seagull, its only asset in the basin.
    Japex holds 150 million pounds ($195 million) in tax losses,
which would allow any buyer to offset future investments in the
basin.
    The exact value of the stake was unclear. Bid deadline for
Japex's stake is expected in December 2024.
    In the Seagull field, Japex's partners include UK oil major
BP  BP.L , with a 50% stake, and Ithaca Energy  ITH.L , holding
a 35% interest.
    Japex's divestiture plan highlights the ongoing retreat from
the ageing North Sea basin, as companies seek to capitalise on
newer and more lucrative opportunities elsewhere.
    In July, U.S. oil major Exxon Mobil  XOM.N  completed its
exit from the North Sea region, where it was present since 1964.
Rival Chevron  CVX.N  is also preparing to leave the basin.
    Smaller North Sea operators including Harbour Energy  HBR.L 
and Serica Energy  SQZ.L  have said they are planning to limit
investments and seek opportunities overseas in the wake of
rising fiscal uncertainty.
    The Labour government's proposal to increase a windfall tax
on oil and gas producers to 38% from 35% starting Nov. 1, has
been deeply unpopular within the energy sector.
    The increase will bring the headline rate of tax on oil and
gas activities to 78%, among the highest in the world. Its
duration was also extended by a year to March 2030. 
    The government is also seeking to change investment
incentives. The exact details are expected to be announced with
the budget on Oct. 30.

($1 = 0.7702 pounds)

 (Reporting by Ron Bousso and Arunima Kumar in London, Yuka
Obayashi in Tokyo; Editing by Emelia Sithole-Matarise)
 ((Arunima.Kumar@thomsonreuters.com;))