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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
2. LNG demand forecast in Asia-Pacific region
1. Global Natural Gas Market
3. Prospects of Asia-Pacific gas development
I. Japan’s effort
II. INPEX’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
1. Global Natural Gas Market
2. LNG demand forecast in Asia-Pacific region
3. Prospects of Asia-Pacific gas development
II. INPEX’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
II. INPEX’s effort
1. Global Natural Gas Market
2. LNG demand forecast in Asia-Pacific region
3. Prospects of Asia-Pacific gas development
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
1. Global Natural Gas Market
2. LNG demand forecast in Asia-Pacific region
3. Prospects of Asia-Pacific gas development
I. Japan’s effort
II. INPEX’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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