LNG

Japan Petroleum Exploration Co. (Japex), the LNG importer involved in domestic Japanese oil and gas projects and with stakes overseas in nations such as Iraq, Indonesia and the UK, reported a drop in profits as global prices weakened.

Feb 13 (LNGJ) - Inpex Corp., the Japanese oil and gas company with LNG assets in Australia and Indonesia, reported a 6.8 percent decline in annual consolidated net sales to 2.16 trillion yen ($14.5 billion) from 2.32 trillion yen ($15.57Bln) in 2022 due to a fall in the price of crude oil. Inpex reported a 19.4 percent drop in annual net profits to 371.53 billion yen ($2.49Bln) from 461.06Bln yen ($3.09Bln) in 2022.

   Net sales of crude oil fell by 9.5 percent to 1.61 trillion yen ($10.78Bln) from the previous year while net sales of natural gas increased by 2 percent to 535.7 billion yen ($3.59Bln). “The average sales price of overseas natural gas decreased by $1.27, or 18.4 percent, to $5.62 per thousand feet. The average sales price of domestic natural gas in Japan increased by 9.9 percent to 90.08 yen ($0.605) per cubic metre,” said Inpex.

Inpex Corp., the leading Japanese energy company and operator of the Ichthys liquefied natural export plant in Australia and developer of the Abadi liquefaction project in Indonesia, reported 34 cargoes shipped in the first quarter from the Ichthys plant at Bladin Point near Darwin.

Inpex gave the figure in its first-quarter earnings when it reported a more than 60 percent surge in net income on higher volumes and prices.

The company posted a 19 percent jump in quarterly sales of 578.4 billion yen ($4.28Bln) in the first three months of 2023 versus 485.3Bln ($3.59Bln) in the 2022 quarter.

Net income for the quarter rose by 61.2 percent to 151.4Bln yen ($1.12Bln) compared with 93.9Bln yen ($695 million) in the prior-year quarter coming mainly from sales of oil, pipeline gas and LNG.

Gas prices

The average overseas natural gas sales price for Inpex increased by 11 percent to $6.73 per thousand cubic feet of gas from $6.06 per mcf.

The Inpex oil and gas assets in Japan comprise the domestic Japanese Minami-Nagaoka Gas Field in Niigata Prefecture and the Naoetsu LNG import terminal.

Inpex said average quarterly domestic natural gas prices soared to 110.67 yen per cubic metres from 65.76 yen per cubic metre in the same quarter last year.

“The company’s net sales of crude oil increased by 44.1Bln yen, or 12.4 percent, to 399.6Bln yen, and net sales of natural gas increased by 49.8Bln, or 40.2 percent, to 173.7Bln yen,” the company said.

“Sales volume of crude oil increased by 1,502 thousand barrels, or 4.3 percent, to 36,677 thousand barrels, and sales volume of natural gas increased by 2,456 million cf, or 2.0 percent, to 128,241 million cf,” Inpex added.

Inpex own a 66 percent stake the Ichthys plant in Australia’s Northern Territory and currently supplies about 10 percent of Japan’s LNG imports. The other main shareholder is TotalEnergies.

The Japanese company has also finalized a revised development plan for the Abadi LNG export project in Indonesia, a joint venture with Shell. 

Inpex submitted the new plan to Indonesian regulators in April 2023 incorporating a carbon-capture and storage component.

Inpex's venture will be located onshore Yamdena Island in the Tanimbar Island chain and use feed-gas from the Abadi gas field in the Masela Block of Indonesia's Arafura Sea.

The liquefaction and export plant could be expected to be operational by around 2030.

Energy ministers of the Group of Seven industrial nations met in the Japanese city of Sapporo on April 15-16 under the revolving chairmanship with Japan as host and issued a hodge-podge statement of aims including one pledging to back new natural gas projects but reduce fossil fuel needs over time.

US investor Warren Buffett, whose Berkshire Hathaway group has a stake in the Cove Point LNG export plant in Maryland and a growing stake in US exploration and production company, Occidental Petroleum, revealed that he had stakes in Japan’s five main trading houses with their widespread energy assets and intended to buy more Japanese shares.

Inpex Corp., the Japanese developer of the Ichthys LNG export project in Australia, has turned its mind again to finding natural gas resources onshore Japan by starting exploratory drilling operations at the Minami-Nagaoka Gas Field in Niigata Prefecture.

Japan companies have until the end of July to decide whether to maintain stakes in the Sakhalin II liquefied natural gas export project in the Russian Far East.

The Japanese government is currently coordinating possible future arrangements with the two Japanese LNG stakeholders in the Sakhalin plant, Mitsui & Co and Mitsubishi Corp.

Under the retention plan, Mitsui and Mitsubishi would keep 12.5 percent and 10 percent stakes respectively, even after Russian President Vladimir Putin's signing of an order that sets up a new operating company to safeguard control by Russia of the oil and gas ventures on and offshore Sakhalin Island.

According to the new Sakhalin II LNG operating company decree, foreign shareholders have until the end of July 2022 to apply to retain their existing shares in the new LNG operating entity after it is established.

Analysts noted that Japan acquires about 9 percent of its LNG from the Sakhalin II plant but pressure has mounted on the Japanese to quit Sakhalin amid sanctions and a pull-out by the other main shareholder Shell over Russia’s invasion of Ukraine.

Gazprom owns just over a 50 percent stake in the Sakhalin II operating company, while Shell held around 27.5 percent and the balance is owned by Mitsui and Mitsubishi.

China interest

The Sakhalin II plant began LNG exports in 2009 and has annual capacity from its two Trains of around 10 million tonnes per annum with shipments going mainly to Japan and South Korea and with China standing by to take over any relinquished Japanese stakes.

A statement said that the Japanese Prime Minister Fumio Kishida and Koichi Hagiuda, the Minister of Economy, Trade and Industry, discussed the Sakhalin energy supply issue at a meeting on July 15.

The Kishida government has stressed the need to retain interests in oil and gas projects off Sakhalin as they are vital to securing stable energy supplies in a global environment of surging energy prices.

The Mitsui and Mitsubishi stakes in Sakhalin II are in addition to Japan’s investments in the Sakhalin 1 project, Sakhalin Oil and Gas Development Co. though a consortium including Japan Petroleum Exploration Co, Japan National Oil Corp, Itochu Corp and Marubeni Corp.

US major ExxonMobil, the operator of Sakhalin I, has already announced its pull-out from the oil venture where it said other shareholders in addition to the Japanese included Russian and Indian companies.

These are units of oil company Rosneft and the New Delhi-based Indian company ONGC-Videsh.

The Japanese companies have taken part in the Sakhalin I oil project since 2006 and they have been main customers for the oil shipments.

Japanese LNG importer JERA Co. Inc has opened a new pipeline linking its Futtsu LNG import terminal to the Anegasaki Thermal Power Station to help ensure stable long-term energy supplies for Chiba Prefecture.

Japan Petroleum Exploration (Japex), which operates the main LNG import terminal in Japan’s Fukushima Prefecture and has a stake in an LNG receiving terminal in the Vietnamese port city of Haiphong, said it was also planning to expand its shale oil and gas interests in the US.

Japanese LNG industry participants, export plant operator Inpex Corp. and engineering company JGC Holdings are teaming up with the Thai national energy provider, which has increasing natural gas and LNG stakes, to develop a carbon-capture and storage (CCS) project in Thailand.

Thailand’s Public Company Exploration and Production (PTTEP) has stakes in Malaysian floating LNG as well as in Mozambique LNG and is taking over the operatorship of the main natural gas field in neighbouring Myanmar.

While all three companies are heavily involved in the energy transition on fuels in their promotion of LNG and pipeline gas, with Inpex operating the Ichthys LNG plant near Darwin in Australia and JGC being a builder of LNG plants and terminals, they are now exploring Southeast Asian CCS prospects.

They said the potential development of the CCS project in Thailand would help reduce greenhouse-gas emissions and accelerate the decarbonization of Thai industries and the country as a whole.

Studies and solutions

Inpex, JGC and PTTEP have now signed an accord on the Thailand Carbon-Capture and Storage Initiative, which aims to study the potential development of CCS solutions to help industries including the oil and gas sector, hard-to-abate industries and power generation reduce their carbon-dioxide emissions.

CCS involves capturing CO2 from industrial processes before it enters the atmosphere and transporting the CO2 for underground storage in geological formations where they will be appropriately managed and monitored.

“The collaboration will involve identifying and evaluating facilities as well as procedures and technologies concerning CCS to build economically viable CCS solutions for Thailand,” said a statement.

PTTEP said the initiative reflected its determination to take part in regional efforts to manage and mitigate GHG impacts.

“We have the potential to help industries and Thailand reduce carbon emissions and achieve carbon neutrality goals,” the Thai company added.

Reforms

Inpex said it was proactively engaging in energy structure reforms towards the realization of a net-zero carbon society by 2050 while responding to the energy demands of Japan and other countries.

“The company aims to create clean energy business opportunities centred on CCS in Thailand with a view to expanding these opportunities to other parts of Asia,” said Inpex, whose headquarters are in Minato City in Tokyo.

JGC, based in Yokohama, noted that among the three it had “a rich track record” of building CCS facilities not only in Japan, but also in Algeria and Australia.

“The company also provides technical consulting services with energy and environmental themes, combining various methods such as surveys, analysis and evaluation, simulation, and risk assessment, and contributing to the realization of CCS through the provision of a wide range of solutions,” it explained.

This Japanese corporate collaboration on the Thailand CCS initiative is linked to the Asia Energy Transition Initiative (AETI), a plan unveiled by the Government of Japan in 2021 that aims to help achieve sustainable economic growth and carbon neutrality in Asia through energy transitions.