Inpex president upbeat about LNG developments

Inpex Pres. Naoki Kuroda, in an interview with Japan's Nikkei Business Daily, remains upbeat on his company's prospects regarding the development of two LNG projects despite the current economic downturn.

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Feb. 2 -- Inpex Pres. Naoki Kuroda, in an interview with Japan's Nikkei Business Daily, remains upbeat on his company's prospects regarding the development of two LNG projects despite the current economic downturn.

Kuroda said Inpex is making a huge investment in LNG at the moment because the lead time for natural resources development is long. "We cannot do anything if we look at only short-term trends."

He acknowledged that demand for resources is falling amid the economic slowdown but the Japanese firm nevertheless plans to start production in Australia in 2015 and in Indonesia the following year.

"We expect that the economy will have recovered and demand for LNG will have increased by then," he said, adding that, "It's necessary to continue active investments from medium and long-term perspectives."

Kuroda noted that Inpex expects its two projects to produce 12-13 million tonnes/year, which accounts for about 20% of domestic demand. "The projects will contribute to a stable energy supply and become a major revenue source for us," he said.

Referring to the amount of investment for each project—$20 billion in Australia and $11.2 billion in Indonesia—Kuroda said Inpex will "sort out the details of the plants before finalizing the amounts."

In fact, Kuroda said the actual costs would be lower than the estimates because equipment prices are falling.

"We will also draw up the best combination of loans and bonds to procure funds," he said, adding: "We can make the projects profitable and keep our finances sound with cautious risk management."

Kuorda said Inpex has yet to start formal sales negotiations, but large-lot customers are showing strong interest. Since LNG releases less carbon dioxide than oil, it is attracting more demand.

Asked if Royal Dutch Shell Group is interested in participating in the Indonesian project, Kuroda said: "More than 10 companies have expressed interest, though we haven't entered into tie-up talks with any of them."

"We have a 100% stake in the project and may consider letting other companies take partial interests," he said.

However, Kuroda downplayed any talk of a shakeout among resource development companies.

"We have no plans for a merger," he said. "What's necessary for growth is to increase our stakes in overseas natural resource projects. We will consider tie-ups with Japanese and foreign competitors on large-scale oil and gas development projects that would be difficult to handle on our own."

Concluding, Kuroda expressed his company's goal, saying that, "Inpex has a daily output equivalent to 400,000 bbl of crude oil at present, and we aim to increase that figure to 800,000-to-1 million bbl and join the ranks of the semimajors in the future."

Contact Eric Watkins at hippalus@yahoo.com.

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