Inpex Corp, Japan's biggest oil and natural gas explorer, aims to accelerate its expansion of production and sales of liquefied natural gas (LNG) on the premise that LNG market will remain tight in the mid-term, its CEO said on Thursday.
"Global LNG market is expected to remain tight in the mid-term due to the structural change of the global natural gas market since Russian invasion of Ukraine," Inpex CEO Takayuki Ueda told Reuters in an interview.
The global gas supply chains have changed, with European countries seeking to import more LNG to replace Russia's pipeline gas and the United States boosting export of the super-chilled fuel, while Russia is looking at providing more gas to India and China, possibly through pipelines, he said.
"We'll make more efforts to acquire assets that can respond to future demand growth of LNG, including expanding Ichthys," Ueda said, referring to its LNG project in Australia.
To ensure a stable supply of the fuel, Inpex aims to boost its LNG production and sales volumes earlier than it had targeted under its mid-term plan unveiled last February, just before the Ukraine crisis, he said.
Inpex, which is on track to boost an annual production capacity of Ichthys to 9.3 million tonnes in 2024 from 8.9 million tonnes now, will explore the surrounding areas for additional gas sources while accelerating its consideration of an expansion of the project in around 2030, Ueda said.
Inpex, 19.97% owned by Japanese government, has said it wants to make a final investment decision on Indonesia's Abadi LNG project in the latter half of this decade and start production early in the next.
The project, in which Inpex is the lead investor, has faced years of delay after various changes in planning, and more recently, due to Shell's SHEL.L withdrawal plan.
Indonesia is working to find a replacement investor in the project after Shell communicated to authorities their intention to divest 35% of their stake in it.
Indonesia's regulator said in September Inpex was expected to submit a revised development plan by the end of 2022, but the company has not done so, Ueda said.
"The partner issue and the carbon capture and storage (CCS) details are very important and it's difficult to move the project forward unless those issues are addressed," he said.
In December, Inpex announced a 20-year deal with U.S.-based Venture Global LNG to import 1 million tonnes per year from the firm's Louisiana project.
It was Inpex's first major offtake deal and aimed at reinforcing its supply resilience and preparing for market tightness, Ueda said, predicting similar deals could happen as it aims to boost its LNG dealing volume, through output and trading, to 10 million tonnes by 2030 from about 7 million now.
(Reuters - Reporting by Yuka Obayashi and Miho Uranaka. Editing by Jane Merriman and David Evans)