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Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

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Japan Is Aggressively Buying Up Oil And Gas Around The World

This coming year could be a surprisingly exciting time for oil and gas developers.

Yes, energy prices are depressed right now. But not everyone sees that as a negative. In fact, private equity funds are still raising record amounts of capital for energy investments — with managers and investors alike seeing the current downturn as a prime time to pick up good assets for cheap.

Most of that PE money is earmarked for U.S. shale. But this week’s announcements from Indonesia state oil firm Pertamina, and Japanese government arm Jogmec, show that the spending spree may now be extending to global oil and gas assets.

Pertamina had $700 million this year for acquisitions — and will likely have billions for the coming year. Jogmec is even more flush with cash — having arranged financial backing totaling $5.2 billion yearly for oil and gas M&A.

That’s a lot of cash now hunting for projects. So the question is — where in the world might these big players be looking?

Obviously, both firms are headquartered in Asia. Suggesting that this region would be a logical place to look for buyouts. But recent events show the focus here is likely to extend well beyond just Asian projects. Pertamina, for example, was decidedly Africa-minded this past year. Buying into projects in Gabon and Mozambique.

Jogmec also favored Africa — providing financial support for Japanese firms working in onshore Kenya. And stepping out even further by getting into frontier exploration in Greenland.

In fact, as the map below shows, Jogmec has a worldwide scope for oil and gas projects. Covering six continents where the company has supported projects through equity capital participation or financial guarantees.

(Click to enlarge)

Source: Jogmec Upstream Oil and Gas Business Activities report

That suggests Jogmec’s billions could theoretically be deployed almost anywhere in the world. Although a closer look at the company’s recent activities provides some deeper clues on where exactly it might be considering.

A little-known fact about Jogmec is that it also provides government-to-government support for petroleum activity. Including helping foreign governments conduct geophysical surveys over prospective areas in the onshore and offshore. Related: Why The Bakken Needs The Dakota Access Pipeline

By footing the bill for seismic work globally, Jogmec actually gets a “sneak peak” at data all over the world. Which it uses to identify project opportunities that it later invests in.

And here’s the map showing everywhere that Jogmec (and its predecessor company JNOC) has been surveying.

(Click to enlarge)

Source: Jogmec Upstream Oil and Gas Business Activities report

Now, here’s a critical point. The higher the number on the projects above, the more recently they’ve been conducted. Which gives us some clues about where Jogmec has been focusing on over the past few years.

Latin America is one spot that jumps out. With Jogmec having executed four geophysical projects in Mexico, as well as one in Colombia.

Another surprising spot is southern Russia. Where Jogmec has been doing not just geophysics, but also exploratory drilling.

Eastern Africa has also held some interest for the company. Like Pertamina, it’s been involved in Mozambique — and has also been assisting the government of the tiny island nation of the Seychelles.

One final place that jumps out is Southeast Asia. Where Jogmec has recently been working on offshore exploration in both Vietnam and Malaysia.

Obviously, the firm could look anywhere going forward. But this past work provides some strong indications on which areas will be first targeted — a point that should be of note for project developers in any of these parts of the world. Jogmec also doesn’t discriminate in terms of exploration or development projects — being heavily involved in both stages.

With billions to spend and a hunger to secure supply, this firm could become a valuable partner for numerous projects around the world.

Here’s to the right backing,

By Dave Forest

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