Japan Petroleum Exploration (Japex) said on Tuesday it plans to delay the launch of its Hangingstone oil sands expansion project in Alberta by a few months to mid-2017, a move that also pushes up costs by $250 million.

The oil and gas developer said investment by a subsidiary in the expansion project is set to rise to $1.5 billion from $1.25 billion.

Japex aims to produce 20,000 barrels per day of bitumen from the project, where a subsidiary owns a 75 per cent stake, while Nexen Inc holds the rest.

The company also said on Tuesday it will keep the Hangingstone oil sands concession known as 3.75 section closed, after shutting down production in May due to low prices, even after devastating fires in the area were brought under control.