Eric Watkins
Senior Correspondent

LOS ANGELES, Aug. 29 -- Inpex Holdings Inc. has begun a ¥100 billion project to build a regasification terminal in Niigata Prefecture on Japan's Honshu Island and anticipates starting regular operations in 2014.

But the Inpex plan to supplement Japan's rapidly diminishing domestic gas supply with imports is clouded by environmental issues in Australia and by resource nationalism in Indonesia, according to the Nikkei Business Daily newspaper.

Teikoku Oil Co., an Inpex group subsidiary, is supplying its natural gas customers in eastern Japan through a 1,400 km pipeline from Nagaoka in Niigata Prefecture. The company projects that the field will be depleted in 20 years.

NBD said Teikoku is planning to supplement its domestic supply with imports from a concession in Ichthys, Australia, which will produce 8 million tonnes/year, or about 10% of Japan's total gas imports.

Environmental concerns
As part of its concession, acquired in 1998, Inpex planned to build an LNG base in the Maret Islands off Western Australia, about 200 km from Ichthys gas field.