Japex Plans Sale of Seagull Stake in the North Sea

The Japanese company Japan Petroleum Exploration, known as Japex, is considering selling its 15% stake in the Seagull oil and gas field in the British North Sea due to uncertainties regarding the British government's tax policy, as reported by Reuters. Currently, Japex is seeking interested bidders for its stake in the BP-operated field. A company spokesperson stated via email that all possible measures to enhance the value of their UK operations are being examined. However, a final decision has not yet been made. Japex has been involved in the Seagull field since 2014, which began production in 2023 and is expected to reach a peak output of about 50,000 barrels of oil equivalent per day. BP holds 50% and Ithaca Energy 35% of the field. The Japanese company is considering withdrawing from its upstream activities in the United Kingdom, which could mean selling their local unit or their stake in the Seagull field—their only asset in this region. Potential buyers might benefit from Japex's tax losses amounting to 150 million pounds (195 million dollars) to offset future investments. A deadline for submitting bids for the stake is expected in December 2024. ExxonMobil already withdrew from the North Sea in July after decades of operation, and Chevron is also planning a withdrawal. Smaller companies like Harbour Energy and Serica Energy are reducing investments due to increasing tax uncertainties. The proposed increase in the windfall tax to 38% by the Labour government, which would result in a total taxation of 78% on oil and gas activities, is facing significant industry opposition. This tax is intended to remain in place until March 2030. Furthermore, the government is considering changes to investment incentives, which are expected to be announced with the budget on October 30.