Japex to exit UK North Sea with sale of oilfield stake

Japex is planning to exit its oil and gas field in the UK North Sea due to the increased tax rates.

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Japan Petroleum Exploration (Japex) is exploring the sale of its 15% stake in the Seagull oil and gas field in the UK North Sea amid uncertainties over government tax policies, reported by Reuters.

The company is calling for bids for its share in the BP-operated field.

In an emailed statement, a Japex spokesperson said: “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.”

The spokesperson added that no decision has been made yet.

Japex acquired its interest in Seagull in 2014, with the field commencing production in 2023.

It is expected to reach a peak output of around 50,000 barrels of oil equivalent per day, with BP holding a 50% stake and Ithaca Energy owning 35%.

The Japanese company is contemplating an exit from its UK upstream operations, which may involve selling its local unit or its stake in the Seagull field, its sole asset in the region.

 Japex possesses £150m ($195m) in tax losses, offering a financial incentive for potential buyers to offset future investments in the basin.

The deadline for bids on the stake is expected to be in December 2024.

In July, ExxonMobil exited the North Sea after decades and Chevron is also planning for withdrawal.

Smaller companies such as Harbour Energy and Serica Energy are scaling back investments due to the growing fiscal uncertainty.

The proposed increase in the windfall tax to 38% by the Labour Government, resulting in a total tax rate of 78% on oil and gas activities, has faced significant pushback from the industry.

This tax is expected to remain in place until March 2030.

Additionally, the government is considering alterations to investment incentives, with details to be announced alongside the budget on 30 October.

Read the latest issue of the OGV Energy magazine HERE