Page 5 - AsianOil Week 19 2022

AsianOil COMMENTARY AsianOil

Inpex intends to raise
production at the
Ichthys LNG terminal in
Australia to 9.3mn tpy
by 2024.

fact that this makes up two-thirds of its profit (G7) member countries to bring in a ban on all
forecast for the year suggests that the company imports of Russian oil. (See: Japan agrees to G7
anticipates prices and the trends driving them ban of Russian oil imports, page 11) Tokyo has
cooling off in the second half of 2022. It remains said that it will take its time phasing out Russian
to be seen how this expectation will play out and oil imports, but nonetheless, this adds further
whether projections will soon need to be revised uncertainty for Japanese companies with invest-
again. ments in Russian energy projects.

Headwinds What next?
While it finds itself buoyed by current trends, In Inpex’s case, however, the company has
though, Inpex also has certain challenges to sought to downplay its exposure to Russia and
contend with, including how to proceed with its focus instead on some of its other major projects.
Russian investments, which are in the spotlight Inpex said this week that it planned to boost
in the wake of the war in Ukraine. output at the Ichthys LNG project in Australia
Inpex owns a stake in the Sakhalin-1 oil pro- to 9.3mn tonnes per year in 2024 from 8.9mn
ject and another oil project in Irkutsk in Rus- tpy today, though Yamada cautioned that any
sia. However, Yamada noted that Russian oil immediate increase to respond to tight global
accounts for only 1% of the company’s total pro- LNG supply would be difficult to achieve.
duction, adding that any disruption to Russian The company also reiterated its commitment Yamada noted
projects would have a limited impact. to its planned Abadi LNG project in Indonesia,
Asked about Inpex’s stance on the projects despite the deadline for a final investment deci- that Russian
amid the ongoing war in Ukraine, Yamada sion (FID) on that development being pushed oil accounts for
said the company would act in line with its back twice since the second half of last year.
partners, including the Japanese government. Inpex is now targeting FID on Abadi for the only 1% of the
And the government maintains that there are second half of the 2020s, with production start-
compelling reasons to retain Japanese invest- ing in the early 2030s. company’s total
ments in Russia for now. Not least among these “We had to rethink plans after Shell’s with-
is the fact that any abandoned stakes could be drawal and growing decarbonisation trend ... production.
picked up by others, including Chinese compa- but we still want to make the Abadi as the sec-
nies, while Japan would be left to source alter- ond pillar of our LNG business following the
native supplies of energy. This is a particular Ichthys,” Yamada said.
concern on the gas side, with the majority of Shell has been trying to sell its 35% interest
output from the Sakhalin-2 LNG project going in Abadi but these efforts have run into obsta-
to Japan. cles. And Inpex has previously said the pro-
Other Japanese companies have taken a sim- ject may need to be redesigned to incorporate
ilar line to Inpex in recent days, saying they carbon capture and storage (CCS). The initial
will follow government policy on their Russian delays to the deadline for FID were attributed
investments, even as they have written down the to the coronavirus (COVID-19) pandemic, but
value of those assets. At the same time, though, there are other major challenges that need to be
Japan has agreed with other Group of Seven addressed before the project can proceed.™

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