JAPEX Flags LNG Cost Surge, Iraq Output Halt Amid Middle East Disruptions

JAPEX is facing rising LNG procurement costs and halted oil production in Iraq as disruptions tied to Middle East tensions impact supply and operations.

(P&GJ) — Japan Petroleum Exploration Co. (JAPEX) said rising tensions in the Middle East are increasing LNG procurement costs and disrupting upstream operations, highlighting the broader impact of supply constraints tied to the Strait of Hormuz.

The company said it has replaced two LNG cargoes originally scheduled from the Persian Gulf with spot purchases from other regions after shipments were disrupted. As a result, procurement costs are expected to rise significantly compared with pre-crisis levels.

JAPEX said the substitute cargoes will allow it to maintain stable natural gas and power supply, including operations at its Fukushima Natural Gas Power Plant.

At the same time, production at the Garraf oil field in southern Iraq has been suspended following a force majeure declaration by the Iraqi government. JAPEX participates in the project through its subsidiary alongside operator PETRONAS.

The company said there is no timeline for a restart of production at the field, and it does not expect to generate revenue from the project while the suspension remains in place.

While higher crude prices and a weaker yen may support revenues, JAPEX said increased LNG procurement costs and the loss of upstream output could weigh on overall profitability. The company is assessing the financial impact and expects to provide updated guidance in its next earnings forecast.

JAPEX said it will continue monitoring developments in the region while taking steps to maintain stable energy supply.