Inpex Corp. and Japan Oil, Gas and Metals National Corp. (JOGMEC) will begin searching to pinpoint the best locations for natural gas extraction in oil and gas fields in the waters off Shimane and Yamaguchi Prefectures in March.
The fields may hold 1.4 times as much natural gas as Japan's currently known reserves. Inpex and JOGMEC aim to examine whether it would be a sustainable business to extract natural gas there by conducting a full-scale survey.
If successful, this will be the first new development of offshore oil and gas fields in Japan in about 30 years. The survey will begin at two locations in the Sea of Japan, one about 130 kilometers from coast of Shimane Prefecture and the other about 150 kilometers from coast of Yamaguchi Prefecture. It will then be expanded to the surrounding areas. If sufficient reserves are confirmed, production will start in around 2032. The exploration cost is expected to be 33 billion yen, which will be shared equally by Inpex and JOGMEC.
Preliminary surveys so far suggest there may be natural gas reserves of up to 30 million tons off the coast of the two prefectures. Annual production of 930,000 tons is expected, which would raise Japan's self-sufficiency rate in natural gas by 1.2 percentage points to 3.4%.
Japan relies on imports to fill 97.8% of its domestic demand for natural gas. Some of the gas is imported from geopolitically risky regions such as the Middle East and Russia, and there are concerns that supply will become unstable in emergency situations. In response to the global trend of decarbonization, natural gas -- which emits less carbon dioxide than coal -- is in high demand. Many countries are racing to secure their supplies, causing prices to soar.
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