Inpex restructures LNG marketing

INPEX is strengthening its LNG marketing and legal functions ahead of Ichthys’ start-up as part of a wider trend among Japanese companies amid the country’s declining gas demand, Energy News has learned.
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Energy News has been told that the company is undergoing an internal reorganisation in the face of Japan's declining energy needs and the increasing number of LNG export options available to the world's biggest LNG importer.
Inpex's gas business unit oversees the LNG sales and marketing activities associated with LNG projects such as Ichthys in Darwin, whose start-up schedule was recently revised from the third quarter of 2017 to the end of March 2018, and Bontang in Indonesia, which is mostly fed by the Mahakam Block.
"The internal reorganisation is designed to further strengthen and expand the company's marketing functions in order to more flexibly and accurately implement supply and demand regulation as well as transportation once the Ichthys LNG project starts up, in addition to servicing the long-term LNG sales and purchase agreements already in place," An Inpex spokesperson said. 
"The move also reflects Inpex's aim to strengthen its global LNG marketing functions in anticipation of the Ichthys LNG project start up as part of the company's structural alignment toward the realisation of the three growth targets outlined in its medium to long-term vision announced in 2012."
In 2012, the same year Inpex sanctioned Ichthys, both the company and its mother country were still focusing on recovering from a devastating 2011 earthquake and rebuilding the national energy policy after nuclear power generation was switched off.
Among the key initiatives of the vision was to achieve a net production of 1MMboepd and a domestic supply volume of 2.5 billion cubic metres a year by the early 2020s, increasing the latter to 3Bcu.mpa in the long-term.
"It's part of a trend that Japanese companies are trying to bolster their marketing and trading capabilities," Wood Mackenzie's Singapore-based vice president Asia-Pacific Kerry Anne Shanks told Energy News.
"As the opportunity for [gas] marketing in Japan diminishes because of declining LNG demand there, the companies are looking to more internationally-focused business, and marketing LNG to Japanese companies is more difficult, so marketing outside of Japan makes sense."
Woodside Petroleum CEO Peter Coleman told Energy News last year that he could see when he started at the company in 2011 that it was too reliant on Japan's fortunes, and that it was clear even then that Japan was a declining, if still very strong, force in global gas demand.
While Ichthys' gas is largely booked up with long-term sales and purchase agreements with Japanese utilities, Shanks said that "as the project wraps up they might need some spare cargoes, and it may be that they can run above capacity."
Inpex has a 62.245% stake in Ichthys along with French supermajor Total (30%), with customers CPC Corporation, Taiwan (2.625%), Tokyo Gas (1.575%), Osaka Gas and Kansai Electric Power (1.2% each), JERA (0.735%) and Toho Gas (O.42%) taking up the rest.