On the assumption that the mid-term LNG market will remain constrained, Inpex Corp, Japan’s largest oil and natural gas explorer, plans to quicken the expansion of its LNG production and sales. The company’s CEO announced this on Thursday.
According to Inpex CEO Takayuki Ueda, the anticipation is that the tightness in the global LNG market will last for the foreseeable future. It is due to fundamental changes in the natural gas market caused by Russia’s invasion of Ukraine.
The global LNG supply chain changed
The global supply chains for gas have changed, Ueda said. Now, European nations are looking to import more LNG to replace Russia’s pipeline gas. Also, the United States is increasing exports of the super-chilled fuel. Meanwhile, Russia is considering expanding its supply of gas to India and China, possibly through pipelines.
Ueda, referring to the company’s LNG project in Australia, stated that they will make more significant efforts to purchase assets that could meet the expansion in LNG demand in the future, including expanding Ichthys.
Major Japan’s LNG producer to boost production
Inpex intends to increase its LNG production and sales levels earlier than it had intended under its mid-term plan released last February. It was just before the Ukraine crisis, Ueda stressed. The company aims to ensure a steady supply of fuel.
While speeding up its consideration of an expansion of the project in around 2030, Inpex will study the surrounding areas for additional gas sources. The company is on pace to increase the annual production capacity of Ichthys to 9.3 million tons in 2024 from 8.9 million tons today,
The Japanese government owns 19.97% of Inpex, which has stated that it plans to make a final investment decision on Indonesia’s Abadi LNG project in the second half of this decade and begin production as soon as possible in the third.
Japan plans to cover demand in the South Pacific area
Years of delays happened with the project, in which Inpex is the primary investor. It is a result of multiple changes in planning and, more recently, it is a result of Shell’s withdrawal strategy.
Following Shell’s notification to the relevant authorities of their decision to sell their 35% investment in the project, Indonesia is now looking for a replacement investor.
Inpex was supposed to submit a new development plan by the end of 2022, the Indonesian regulator stated in September. But the business has not done so. Ueda said until resolving the partner issue and the specifics of carbon capture and storage (CCS) it is challenging to take the project forward.
Inpex announced a 20-year agreement in December to buy 1 million tons of LNG annually from Venture Global LNG’s Louisiana project.
It was Inpex’s first significant offtake agreement, Ueda said, and it was intended to strengthen its supply resilience and prepare for market tightness as it intends to increase its LNG dealing volume, through output and trading, to 10 million tons by 2030 from roughly 7 million currently.