prospects of asia-pacific gas development, japan's effort · prospects of asia-pacific gas...

Prospects of Asia-Pacific Gas Development, Japan's Effort

INPEX CORPORATION

October, 2011

Northeast Asia Petroleum Forum 2011

1

1. Global natural gas market

Agenda

2. LNG demand forecast in Asia-Pacific region

3. Prospects of Asia-Pacific gas development

I. Japan’s effort

II. INPEX’s effort

4. Conclusion

2

Global natural gas stream

Source:BP Statistical Review of World Energy

• Natural Gas to be imported;

Japan/Korea: LNG*

China/Europe: Pipeline + LNG

* Korea is planning to import by pipeline from Russia

2009

3

Natural gas supply/demand outlook (pre-Fukushima)

0

20

40

60

80

100

2010 2015

Demand

Production bcfd

0

20

40

60

80

100

2010 2015

bcfd

0

20

40

60

80

100

2010 2015

0

20

40

60

80

100

2010 2015

0

20

40

60

80

100

2010 2015

bcfd

bcfd

bcfd

Demand

Production

Demand

Production

Demand

Production

Demand

Production

Source: BP statistics, Deutsche Bank, INPEX analysis

• There are two main regions natural gas to be imported;

Asia: to meet demand growth

Europe: to makeup decreasing indigenous production

The shale gas, game-changer,

cleared import demand away.

Europe

Russia

Middle-east

Asia

North America

4

Japan: More gas to be needed (post-Fukushima)

• Japan to increase LNG import up to tens of million ton

Demand(2010)

70mtpa

10mtpa

9mtpa

9mtpa

Xmtpa

Demand

(post-Fukushima)

Decommissioning of

all existing

Fukushima units

Delay/abort of

planned additional

nuclear units

Lower utilization of

existing nuclear power

Decrease in power

consumption

5

World: More gas may be consumed (post-Fukushima)

• The more conservative nuclear policy the more natural gas consumption, maybe…

0 20 40 60 80 100 120

Germany

Ukrain

UK

Canada

India

S.Korea

Russia

China

France

Japan

US

# of nuclear plant

(≒mtpa of LNG)

Difficult to build new

power plant

May become more

conservative for

nuclear approval

Likely to decrease

power generation

from nuclear plant

6


1. Global Natural Gas Market


I. Japan’s effort


4. Conclusion

7

Global LNG demand forecast

*Australia/Brunei/Indonesia/Malaysia/Papua New Guinea/Russia East/Bangladesh/China/Dubai/India/Indonesia (Java)/Japan/Kuwait/Malaysia (Peninsular)/New

Zealand/Pakistan/Philippines/Singapore/South Korea/Taiwan/Thailand/Vietnam

Source: Wood Mackenzie, INPEX analysis

Year

0

50

100

150

200

250

300

350

400

450

'11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 '25

ROW

Europe

Asia Pacific**

Demand(mtpa)

• Asia-Pacific* is/will continue to be a “LNG Demand Center”

Post-Fukushima

8

LNG supply and demand forecast in Asia-Pacific* region

0

50

100

150

200

250

300

'11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 '25

Contracted volume

(incl other region)

Demand vs. Supply (mtpa)

Supply from AP project (operational/under construction)

Supply from AP project (Possible/Probable development)

• Ample supply if all the project start up on schedule, however…

*Australia/Brunei/Indonesia/Malaysia/Papua New Guinea/Russia East/Bangladesh/China/Dubai/India/Indonesia (Java)/Japan/Kuwait/Malaysia (Peninsular)/New

Zealand/Pakistan/Philippines/Singapore/South Korea/Taiwan/Thailand/Vietnam

Source: Wood Mackenzie, INPEX analysis

Year

Supply from AP project (Speculative project)

Diversion from Atlantic PJ

Demand(pre-Fukushima)

Demand(post-Fukushima)

9

Challenges in Asia-Pacific gas development (1)

• Domestic demand growth in gas-exporting countries

Malaysia

Indonesia

• Possible decline from some existing LNG projects

10

Challenges in Asia-Pacific gas development (2)

0

200

400

600

800

1000

1200

1400

1997 1999 2001 2003 2005 2007 2009 2011

Year of FID

EPC Costs(US$/tpa)

Source: Press, INPEX analysis

• Skyrocketing EPC cost Project owner’s profit decrease massively

Some new projects may be stalled

11

LNG demand forecast in Asia-Pacific region

0

10

20

30

40

50

60

70

80

90

2010 2015 2020 2025 0

10

20

30

40

50

60

Demand(pre-Fukushima) 90

2010 2015 2020 2025 0

10

20

30

40

50

60

70

80

90

2010 2015 2020 2025 Year Year Year

Demand vs. Commitment (mtpa)

Japan South Korea China

Commitment

Uncommitted demand

Source: Wood Mackenzie, press, INPEX analysis

• Japan/Korea/China need to import “more gas”

Demand(post-Fukushima)

12

I. Japan’s effort





4. Conclusion

13

Japanese participation in “Existing” AP LNG project

Remark: Blue: Trading company, Red: Oil Exploration company, Purple: Power/Gas company

Bayu Undan Capacity Start Yr PI

3.2mtpa 2006 INPEX:11.27%,

TEPCO & TokyoGas:9.2%

Tangguh Capacity Start Yr Participating Interests (PI)

7.6mtpa 2009 Mitsubishi:9.9%, INPEX:7.8%

JX:7.45%, LNG Japan:7.35%

Mitsui:2.3%

Bontang Capacity Start Yr PI (Mahakam Gas Field)

16.6mtpa 1977 INPEX:50.0%

North West Shelf Capacity Start Yr PI

16.3mtpa 1989 MIMI*:16.7%

*Mitsubishi & Mitsui

Brunei Capacity Start Yr PI

7.2mtpa 1972 Mitsubishi:25.0%

Malaysia Capacity Start Yr PI (LNG Plant)

Satu 8.1mtpa 1983 Mitsubishi:5%

Dua 7.8mtpa 1995 Mitsubishi:15%

Tiga 6.8mtpa 2003 JX:10%, Mitsubishi:5%

Sakhalin II Capacity Start Yr PI

9.6mtpa 2009 Mitsui:12.5%

Mitsubishi:10.0%

14

Japanese participation in “Planned” AP LNG project

Abadi Capacity Start Yr PI

2.5mtpa 2016 INPEX(Op):90%

Ichthys Capacity Start Yr PI

8.4mtpa 2016 INPEX(Op):76%

Donggi Senoro Capacity Start Yr PI

2.0mtpa 2014 SLD*(Op):59.9%

*Mitsubishi:75% & Kogas:25%

Papua New Guinea Capacity Start Yr PI

6.6mtpa 2014 JX:4.7%

Gorgon Capacity Start Yr PI

15mtpa 2014

Osaka Gas:1.25%

Tokyo Gas:1.0%

Chubu:0.42%

Weatstone Capacity Start Yr PI

3.2mtpa 2016 TEPCO:11.25%

Kyushu:1.37% Queensland Curtis Capacity Start Yr PI

8.5mtpa 2014/15 TokyoGas:1.25%

Pluto Capacity Start Yr PI

4.3mtpa 2011 Kansai:12.5%

TokyoGas:10.0%

15

Japanese participation in AP LNG project – Trend

• Operatorship

3 New LNG Projects (Ichthys, Abadi and Donggi Senoro)

operated by Japanese company

INPEX: Ichthys, Abadi

Mitsubishi: Donggi Senoro

• LNG Buyers participation

Japanese electric power/gas companies actively acquire LNG

project interest as a package of purchasing its LNG

The main purpose of its acquisition is to secure their own-used

gas itself and get the volume flexibility

Expansion and enhancement of their business through the deeper

involvements in the Gas Supply Chain (Exploration ~ Development

~ Production/Operation ~ Transportation ~ Market)

16





I. Japan’s effort

4. Conclusion

17

Minister of Economy Trade and Industry 18.94% Japex 7.31% Mitsui Oil Exploration 4.84% Mitsubishi Corporation 3.68% JX Holdings 3.68%

Corporate Profile

Company Name

Head Office

Consolidated Employees

INPEX CORPORATION (1605 JP)

5-3-1 Akasaka, Minato-ku, Tokyo

1,854 (as of March 31, 2011)

Major Shareholders

(as of March 31, 2010)

Total Asset JPY 2,680.3 billion (as of March 31, 2011)

Closing Date March 31st

Overseas Offices

Jakarta (Indonesia) Perth/Darwin (Australia) London (UK)

Abu Dhabi (UAE) Tehran (Iran) Tripoli (Libya) Cairo (Egypt)

Houston (US) Caracas (Venezuela) Paramaribo (Suriname) Rio de

Janeiro (Brazil)

Capital Stock JPY 290.8 billion

Issued Shares 3,655,809 Common shares / 1 Special Class share (Golden share)

18

Long-term Growth Target & Strategies

for Corporate Growth

The INPEX Group expands oil and natural gas exploration and development activities in a sustainable

manner and aims to become a global energy company with the daily production of 800 thousand to one

million barrels of oil equivalent in the late 2010s.

While holding upstream oil and gas business as the core business, the INPEX Group aims to become a

company which provides diversified energies through establishing a natural gas supply chain and working

proactively towards the development of unconventional hydrocarbon resources and new energies.

Long-term Growth Target

Three Strategies for Corporate Growth

■ Based on a well-balanced asset portfolio, further strengthened operational and technical capabilities and

reinforced management, all of which have been formed as the result of business integration, the INPEX

Group pursues the following three strategies:

ｰ Sustainable expansion of oil and gas exploration and production ventures

ｰ Establishment of a gas supply chain and enhancement of gas business

ｰ Growing into a company which provides diversified energies

19

Major Assets in Production & Development

In Development Undeveloped (Discovered) In Production Preparation for Development (Discovered)

North Caspian Sea Block (Kashagan Oil Field, etc)

Offshore North Campos Frade Block

WA-37-R (Ichthys Gas Condensate Field )

Masela Block (Abadi)

Berau Block (Tangguh Unit)

Sakhalin 1

ACG Oil Field

South Natuna Sea Block B

JPDA03-12 (Bayu-Undan Oil & Gas Field)

Offshore Mahakam Block/Attaka Unit

ADMA Block

El Ouar I/II

Minami-Nagaoka Gas Field

Copa Macoya/Guarico Oriental Blocks

Offshore D.R. Congo Block

Ohanet Block

WA-35-L (Van Gogh Field)

Joslyn Oil Sands Project

JPDA06-105 (Kitan Oil Field)

Ship Shoal 72, Main Pass 118, West Cameron 401/402, LSL

WA-43-L (Ravensworth Field)

Sebuku Block(Ruby Gas Field)

20

Ichthys LNG Project (1)

WA-285-P

Ichthys Field

Abadi

LNG Plant

21

Production volume (expected):

Approx. 8.4 MTPA of LNG

Approx. 1.6 MTPA of LPG

Approx. 100,000 bbl/d of condensate

(Peak Rate)

FID target: 4Q 2011

Production start target: 4Q 2016

Ichthys LNG Project (2)

L N

G

Condensate

85,000 bpd (peak)

Gas Export Pipeline

42” x approx. 885km

Brewster

Subsea Wells

Future Plover

Subsea Wells

LNG 8.4 million ton/year

LPG 1.6 million ton/year

Condensate 15,000 bd (peak) Flexible

Risers

CPF FPSO

Darwin Onshore Plant Inage

Onshore (natural gas liquefaction plant) FEED works

- Major engineering work completed

- Preparation work for procurement phase in progress

Offshore (Offshore facilities & pipeline) FEED works

- Major engineering work in progress

- ITT (Invitation To Tender) for the CPF etc. issued in November 2010

Application for production license

Submitted Preliminary Field Development Plan to the authority in March 2010

Environmental Impact Assessment(EIA)

Conducted public review of draft EIS (July 15 – September 10)

Plan to issue supplement EIS report taking into account of the public review, to obtain approval from the government

Gas Marketing Activities

Negotiation is ongoing for securing LNG purchase commitment

Organization at Perth office in Australia

Strengthened organizational structures in October 2010

Appointed a TOTAL expert as new project Managing Director

22

Abadi LNG Project

INPEX Masela : 90% (Operator) PT EMP Energi Indonesia (EMPI) :10%

Agreed to transfer a 30% participating interest to a subsidiary of Shell (subject to satisfaction of certain conditions such as the approval of the Indonesian Government )

The Plan of Development (POD) was approved by Indonesian Government in December 2010 - First Phase Development (POD-1) - Development Concept : Floating LNG - Production Volumes : 2.5 MM t/y of LNG 8,400 bbl/d of condensate

Preparation of FEED works which are scheduled to start in 1st half of 2012 and AMDAL(Environmental & Social Impact Assessment Process) are ongoing

Further Study for Future Subsequent Developments according to gas reserves

Plan to transfer of a 10% participating interest to an Indonesian company designated by Indonesian Government, based on the PS Contract

Arafura Sea

FLNG image

23

Leading to Gas Supply Chain and Domestic Natural Gas Business in Japan

Receiving Terminal (image)

Naoetsu LNG Receiving Terminal

- Under Construction in the port of

Naoetsu in Joetsu city, Niigata

Prefecture

- Total investment cost of

approximately 100 billion yen

(including the cost of construction and

land acquisition etc.)

Extension of pipeline network

- Decided to construct the Toyama

Line (natural gas pipeline)

Domestic Natural Gas Saleses

- FY 2011/03 : 1,720 MM m3 increased

by 0.9%

- FY 2012/3 (E) : 1,740 MM m3

Domestic gas

LNG (regasified)

LNG (from 2014 - )

24

21.2 37.0 26.0 27.0 32.5

54.0 36.0 24.0

187.0

275.0

568.0

737.0

240.7

366.0

630.0

788.0

0

100

200

300

400

500

600

700

800

900

1,000

Mar.'11 Mar.'12(E) Mar.'13(E) Mar.'14(E)

Development Exploration Other Capital Expenditure*

Investment Plan

By Activity By Region

(Billions of Yen) (Billions of Yen)

* Mainly investments in Naoetsu LNG Receiving Terminal and domestic pipeline network, etc

25.7 40.0 30.0 31.0

115.9

204.0

433.0

594.0

64.6

59.0

97.0

92.0

23.8

40.0

49.0

48.0

10.7

23.0

13.0

15.0

8.0

8.0

366.0

630.0

788.0

0

100

200

300

400

500

600

700

800

900

1,000

Mar.'11 Mar.'12(E) Mar.'13(E) Mar.'14(E)

240.7

25

Net Production* Volume Projection

423 417 440 450 446 435

-

100

200

300

400

500

600

700

800

900

1,000

Mar. '11 Mar. '12(E) Mar. '13(E) Mar. '14(E) Mar. '15(E) Mar. '16(E)

(Th

ou

san

d B

OE

D)

Asia/Oceania Eurasia Middle East/Africa Americas Total

7%

32%

5%

31%

47%

5%

6%

50%

6%

11%

2020

Long term production target

(800-1,000 thousand BOED)

Existing Projects

New Projects

Ichthys LNG Project

Abadi LNG Project

* The production volume of crude oil and natural gas under the production sharing contracts entered into by INPEX Group corresponds to the net economic take of our group.

Note: Assumptions used for our net production in the year ending March 31, 2012 and later are the same as in the financial forecasts for the year ending March 31, 2012.

26

4. Conclusion




I. Japan’s effort


27

Conclusion

Spectacular economic growth in Asia and its impact on Asia-Pacific LNG demand, plus post-Fukushima LNG demand increase

Challenges in Asia-Pacific gas development

• Gas exports conditional on domestic demand

• Spiraling EPC Cost vs Project Economics

Japan’s effort on Asia-Pacific Gas Development

• Expansion and deepening of its involvement as a Project Operator

• LNG Buyers participation to secure the safe and flexible gas import

INPEX’s effort on Asia-Pacific Gas Development

• Enhancement of our business in the Gas Supply Chain as a Project Operator of Ichthys LNG and Abadi LNG, and Domestic Gas Distributor in Japan

28

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prospects of asia-pacific gas development, japan's effort · prospects of asia-pacific gas...

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