Japan’s Inpex to boost energy exploration

15-May-2012 Intellasia | WSJ | 7:01 AM Print This Post

Inpex Corp. 1605.TO -1.55 percent plans to double its investment in energy exploration to JPY 300 billion ($3.75 billion) over the next five years to meet Japan’s rising demand for fossil fuel in the aftermath of last year’s Fukushima Daiichi nuclear accident.

“Our mission is to own stakes in energy projects, hopefully as an operator,” Inpex President Toshiaki Kitamura said Friday.

Inpex expects its overall investment in the next five years, including for research and development, to total JPY 3.5 trillion.

The decision comes as Japanese companies try to secure great supplies of liquefied natural gas amid government plans to reducing Japan’s reliance on nuclear power.

Inpex aims to achieve output of one million barrels of oil equivalent a day as early as 2020 from 400,000 barrels currently.

The company’s focus will be on LNG, a fuel Japan desperately is seeking to narrow an energy-supply gap caused by closing all the country’s nuclear reactors just over a year after the world’s worst atomic nuclear in a quarter-century.

Tokyo-based Inpex this year decided to join with France’s Total SA FP.FR -0.04 percent to invest $34 billion in the Ichthys LNG project in Western Australia to develop one of the world’s biggest offshore fields. Gas from the field will be piped to a processing plant in Darwin, Australia, which will produce 8.4 million metric tonnes of LNG annually for seven Japanese utilities and Taiwan’s CPC Corp. starting in 2016.

Inpex also plans to participate in the Abadi floating LNG project in Indonesia with Royal Dutch Shell PLC. RDSA.LN +0.80 percent

Inpex also is looking at its Canadian shale-gas assets as a potential source of LNG for Japan, Kitamura said.

An Inpex-led consortium in November purchased a 40 percent working interest from Nexen Inc. NXY -0.81 percent in its shale assets in the Horn River, Cordova and Liard basins in northeast British Columbia.

Kitamura said the assets hold significant reserves and Inpex is considering converting the gas into LNG and selling it to Japan and other countries in Asia. He said he expects Horn River’s gas output to total 200,000 barrels of oil equivalent a day around 2020.

Japan’s Mitsui & Co. and Mitsubishi Corp. 8058.TO +0.24 percent in April signed preliminary agreements with Cameron LNG, a unit of US-based Sempra Energy, SRE -0.12 percent to develop liquefaction facilities at Sempra’s Cameron LNG terminal in Louisiana and take a combined eight million tonnes a year for export, likely to Japan.

Similarly, Tokyo Gas Co. 9531.TO +1.03 percent and Sumitomo Corp. 8053.TO -0.18 percent signed a preliminary agreement with US-based Dominion Resources Inc. D +0.21 percent to buy 2.3 million tonnes a year of LNG from Dominion’s Cove Point project in Maryland for 20 years from the start of its operation, expected in 2017.

Despite many such efforts, Kitamura said he didn’t expect a supply glut as rising demand from Japan and other growing Asian economies will absorb any excess supply.



Category: ResourceAsia

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