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Agency for Natural Resources and Energy The Cabinet Approved the Bill for the Act for Partial Revision of the Act on the Japan Oil, Gas and Metals National Corporation, Independent Administrative Agency

The Cabinet approved the Bill for the Act for Partial Revision of the Act on the Japan Oil, Gas and Metals National Corporation, Independent Administrative Agency, and the bill will be submitted to the 192nd extraordinary session of the Diet. The bill aims to enhance the functions of the Japan Oil, Gas and Metals National Corporation (JOGMEC) to allow the organization to support Japanese upstream developers in acquiring overseas resource companies and other efforts.

1. Purpose of the bill

Recent low oil prices have been shrinking the global investment scale in resource development for two consecutive years, and this trend uncovers the potential risk of a sharp rise in oil prices. Facing this situation, Japan is required to carry out the commitment to encourage upstream development, which was stated in the G7 Ise-Shima Leaders’ Declaration.

Meanwhile, a decrease in the asset value of oil interest has apparently been driving overseas resource companies to sell related stocks and interest. However, this situation will be a good opportunity for Japan to fortify energy security through intensive investment in the area over the next five years or so.

Looking at other countries, national oil companies in China and India, and Western oil majors, have been embarking on the acquisition of interest or companies, while Japanese upstream developers are left behind this trend due to their fragile financial foundations.

Bearing in mind such changes in situation, Japan decided to fortify the functions of JOGMEC to support Japanese upstream developers in acquiring companies and other efforts.

2. Outline of the bill

  1. Supporting upstream developers in acquiring companies and other efforts
    1. The bill is to improve the coverage of JOGMEC’s investment business to enable the organization to support such developers in acquiring overseas resource companies or establishing capital tie-ups with such companies (related to Article 11 (1) (i)).
    2. The bill is to improve the coverage of JOGMEC’s investment business to enable the organization to additionally support such developers in projects that have shifted from oil exploration steps to development steps (related to Article 11 (1) (i)).
    3. The bill is to improve the coverage of JOGMEC’s acquisition business in terms of oil exploration and other rights to help such developers negotiate and win referential negotiation of rights through the acquisition of stocks issued by national oil companies in oil producers (related to Article 11 (1) (iv)).
  2. Diversified fund raising
    • The bill is to improve the coverage of government-guaranteed loans to ensure the funds necessary for supporting such developers in acquiring overseas resource companies or establishing capital tie-ups with such companies, for additionally supporting them in oil development, or for acquiring stocks issued by national oil companies in oil producers (related to Article 14).
  3. Others
    • The bill is to allow JOGMEC to lease seismic survey vessels for survey for oil and national gas to the private sector in order to promote resource development (related to Article 11 (1) (ix)).

3. Effective date

Promulgation date

Release date

October 7, 2016

Division in Charge

Petroleum and Natural Gas Division, Natural Resources and Fuel Department, Agency for Natural Resources and Energy

Ministry of Economy, Trade and Industry1-3-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8901, Japan Tel: +81-(0)3-3501-1511
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