Interview: INPEX sees positive growth for LNG in Japan

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Yutaka Inoue, General Manager – Oil & Gas Business, Gas Business Unit, INPEX
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In this interview with Yutaka Inoue, General Manager – Oil & Gas Business, Gas Business Unit at INPEX, we discuss the impact of nuclear energy and renewables on LNG demand as well as what to expect moving forward in developing Japan’s gas industry.

Watch the video to find out Mr. Yutaka Inoue’s views:

Here is the full transcript of the interview which was conducted at Gastech Singapore.

Gastech News: Will nuclear energy in Japan reduce LNG demand in the long term?

Yutaka Inoue: The Sendai Nuclear Power Plant was reactivated on August 11, and began commercial operations on September 10 [last year]. It is the first time in 23 months that electricity is generated from nuclear power in Japan, since operations were suspended at Kansai Electric’s Oi Nuclear Power Plant in September 2013. On the other hand, it is expected that a significant amount of time will be required for the other nuclear power plants to become operational, and that even when these do become operational, oil-fired power generation facilities will be the first to be phased out. Therefore, it is believed that there will not be a drastic reduction in LNG demand.

Gastech News: As renewables are growing rapidly in Japan, will they threaten future gas/LNG demand?

Yutaka Inoue: While the Feed-in Tariff scheme for renewable energy will help the government respond to peak electricity demands, LNG-generated power will still be required as a contingency, and renewable energy sources are not considered to be sufficiently substantial to replace LNG.

Gastech News: Why did INPEX see value in supporting major new projects such as Prelude and Icthys LNG, and why are these projects important for Japan?

Yutaka Inoue: First of all, the Ichthys LNG Project, of which we are the Operator, is the first, large-scale LNG project to be operated by a Japanese company. It is a competitive, liquid-rich project with a life expectancy of 40 years, with an annual production capacity volume of 8.9 million tons of LNG. We expect this project will play a key role in our mission of delivering a stable and efficient supply of energy to Japan.

Gastech News: With oil prices set to remain under $60 per barrel for some time, where is INPEX focusing overseas upstream investments and why?

Yutaka Inoue: From a medium- to long-term perspective, we will ensure that our key projects like Ichthys, Abadi and the ADCO Onshore Concession are solidly developed or operated, while continuing to invest in new business opportunities to ensure sustainable growth in the medium-to long-term by maintaining and expanding the volume of our production and reserves. We will prioritize opportunities that will enable us to sustain and build our business even in a low-oil-price environment.

Gastech News: How will Japan’s LNG and gas industry evolve in the next 10 years?

Yutaka Inoue: According to Wood Mackenzie (2Q 2015), LNG consumption in Japan in 2030 is expected to be approximately 94.5 million tons, compared to 88.5 million tons in 2014 and 89.6 million tons in 2020. WoodMac’s outlook of sustained bullish LNG demand in Japan can be explained, that is, as follows. While LNG demand for power generation applications is expected to remain more or less level, due to the expectation of the partial re-introduction of nuclear power generation, LNG demand for non-power generation applications (public sector use, industrial use, etc.) is expected to increase, particularly due to the shift in demand from petroleum products as well as the increase in LNG regasification facilities.

Join the Conversation: Do you think nuclear and renewables could threaten LNG growth in Japan, and why? Let us know your thoughts in the comments below.

Securing Japan’s future energy security is a matter of national priority and Japan is now facing challenging decisions regarding the fuels it chooses. Join Mr. Yutaka Inoue at Gastech Japan 2017, to discuss the critical role of gas and LNG for Japan’s future energy security.

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