Inpex to focus on gas projects in Indonesia, Australia

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, June 5 -- Inpex Corp. is investing more into LNG fields in Australia and Indonesia despite a second consecutive fall in group net profit in fiscal 2009.

In an interview with Japanese media Inpex Pres. Naoki Kuroda blamed his company’s drop in profit last year on oil prices sliding by more than $14 to $68/bbl, while the yen strengthened 10 against the dollar.

“We based our earnings forecast for fiscal 2010 on the assumption that crude oil would be traded at $77.50[/bbl],” he told the Nikkei business daily, noting that oil futures climbed to $80-90/bbl recently, but have since been undergoing a downward correction.

As a result, Kuroda said he sees “no need to revise our assumed oil price for now.”

Meanwhile, commenting on the year-long delay in production from Australia’s Ixthys field, originally scheduled to begin output in 2015, Kuroda said there is “no basic change” to the plan.

“We judged that we need to take several months to carefully design the project to realize both stable production and low costs,” he said.

“We have pushed back the final investment decision by one year, to the fourth quarter of 2011, to make preparations for conducting an auction for contractors immediately after finalizing the investment plan,” Kuroda said.

When asked about how Inpex plans to finance investments in the Ixthus and Abadi projects at once, Kuroda said, “We expect investments for 7 years beginning with fiscal 2010 to total about ¥4 trillion. In the latter 4 years, we will require ¥700 billion or so a year.”

Inpex will primarily tap internal reserves as it projects ¥240-250 billion/year of cash flow, he said, adding that the firm “will look outside and consider every option, including equity financing.”

When asked how the weakening of LNG prices might affect the Abadi and Ixthyus projects, Kuroda said there is the possibility that LNG bound for the US will need to be shipped to other countries or regions.

“Even if it becomes difficult to secure profit from shipping LNG to the US, demand is robust in China, India, and other Asian nations,” he said.

“Recently, demand from South Korea has also been expanding,” Kuroda said, adding, “Therefore, it is unlikely that there will be an LNG glut, and I expect little or no impact on our company's development projects.”

Contact Eric Watkins at hippalus@yahoo.com.



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