Formulation of the “JAPEX Management Plan 2022-2030”

Japan Petroleum Exploration Co., Ltd. (JAPEX) announced that it has formulated the "JAPEX Management Plan 2022-2030" (the "Plan"), a medium- to long-term growth strategy for JAPEX that extends through 2030.

Based on our Long-term Vision 2030 and Medium-term Business Plan 2018-2022 formulated in May 2018, we have been working to expand our business domain by promoting oil and natural gas E&P ^(*1) in and outside Japan, as well as launching commercial operation of the Fukushima Natural Gas Power Plant ^(*2), focusing on development of renewable energy, and participating in several feasibility studies for CCS/CCUS ^(*3) in and outside Japan. In addition, we have been working to optimize our business portfolio and improve our financial soundness through measures including terminating overseas projects that are difficult to promptly improve profitability.

Meanwhile, in light of further acceleration of global decarbonization, we lowered in March 2021 our medium- to long-term assumption of crude oil price (JCC ^(*4)) to US$50 per barrel, and in May 2021, we compiled "JAPEX2050: Toward a Carbon-Neutral Society," which sets forth our direction toward 2050.

The Plan is a new management plan to respond quickly and flexibly to changes in the business environment, covering the nine years from FY2022 to FY2030. The basic policy of the Plan is to improve profitability and to build a business foundation for 2030 and beyond. The Plan outlines management goals including interim targets as of FY2026, basic policies for fund allocation and shareholder returns and, to achieve the targets, priority items in each business field comprising E&P, Infrastructure/Utility (I/U), and Carbon Neutral (CN). In order to promote steady progress of the Plan, we will also work to develop and utilize human resources, enhance organizational capabilities, and improve the efficiency and sophistication of operations by digital transformation (DX) and other measures.

Below is a summary of the Plan's management goals and priority items in each business field. For more details, please refer to the appendix.

Management goals

• Business profit^(*5) target: 50 billion yen scale as of FY2030 (30 billion yen scale as of FY2026)
• ROE target: 8% as of FY2030 (5% as of FY2026)
• Profit composition target (E&P-to-non E&Ps): 5-to-5 as of FY2030 (6-to-4 as of FY2026)

Fund Allocation and Shareholder Return Policies

• Out of a total of 500 billion yen in cash inflows during the period of the Plan, allocate 450 billion yen in growth investments and 50 billion yen in shareholder returns.

  • Allocation of 450 billion yen for growth investment: 230 billion yen in E&P, 170 billion yen in I/U, and 50 billion yen in CN

• Adopt a consolidated dividend payout ratio as a basic policy for returning profits to shareholders and pay dividends in line with business results for each fiscal year, with a target payout ratio of 30%

  • Strive to maintain an annual dividend of 50 yen per share even in the event of a temporary downturn in business performance

Priority Items by Business Field

E&P: continue to invest in acquisition of new interests and promote low-carbon operations

• Japan: pursue potential including additional development and offshore exploration, reduce greenhouse gas (GHG) emissions from operations, collaboration with business examinations in other fields such as CCS/CCUS
• Overseas: Acquire new interests

I/U: expand the profit scale of renewable energy and other businesses.

• Japan: take actions to diversify our gas supply method, add more projects on renewable energy development
• Overseas: participate in projects of LNG supply infrastructure development, consider participating in projects on renewable energy development

CN: launch CCS/CCUS prototype project by hub and cluster ^(*6) model utilizing our oil and gas fields, etc.

• Japan: launch CCS/CCUS model projects, consider infrastructure to supply CO₂ and others such as hydrogen and ammonia
• Overseas: participate in CCS/CCUS projects in systematically advanced areas such as North America and Europe, participate in feasibility studies on CCS/CCUS in emerging countries

Through the steady implementation of the Plan, we will continue to strive to contribute to the realization of carbon-neutral society by 2050, and further enhance our growth and corporate value as an integrated energy company.

Related News

• Disclosure on May 13, 2021 "Formulation of "JAPEX2050" for the Realization of a Carbon-Neutral Society in 2050"