Japan's JX enters Brazilian upstream

OREANDA-NEWS. Japanese energy firm JX is making an entry into Brazil's upstream sector after examining the country's potential as a new exploration venue with high prospects for oil discoveries.

JX said today its wholly-owned subsidiary JX Nippon Oil and Gas Exploration will acquire a 30pc participating interest in Brazil's offshore block FZA-M-320 in the Foz do Amazonas basin under a farm-in agreement with the Brazilian subsidiary of Colombia's state-controlled oil company Ecopetrol. The transaction is still subject to approval from Brazil's national agency of petroleum, natural gas and biofuels.

Ecopetrol, the operator of the offshore block, will retain a 70pc interest after the deal. It has recently agreed with JX to sell 2mn bl of Colombian crude for second-half August delivery, marking its first sale to Japan.

Japan is keen in acquiring additional upstream oil and gas assets, targeting to boost its equity upstream output to cover more than 40pc of the country's total oil and gas needs by 2030. The country's equity supplies accounted for 24.7pc of the country's total needs in the 2014-15 fiscal year ending 31 March. Tokyo has also been prompting Japanese firms to hunt for upstream assets, taking advantage of the renewed plunge in oil prices.

JX has previously focused its oil and gas exploration activities in Asia-Pacific. But it has also been studying the possibility of investing in upstream ventures in new exploration areas such as Africa and South America, including Brazil. The company said it will continue to look for additional upstream opportunities in Brazil and worldwide. JX is targeting to boost its overseas oil and gas output to 200,000 b/d of oil equivalent (boe/d) by 2020 against a current 110,000 boe/d.