INPEX (1605) Investor Day 2024 summary

LNG business expansion and operational updates

• Ichthys LNG faced significant production issues in July-August due to heat exchanger gas leaks, reducing output to 35%, with full recovery targeted by early November pending inspections and root cause analysis.

• Focus on long-term stable operation and quick recovery at Ichthys LNG, with enhanced safety and reliability measures and plans for additional development, including new wells, Cash Maple field production in the 2030s, and a potential third train expansion.

• Brand recognition and local partnerships in Australia have strengthened, supporting recruitment, joint ventures, community engagement, and workplace excellence.

• Navigating regulatory and investment headwinds in Australia, leveraging government relationships and supporting the national gas strategy and CCS as essential for net-zero.

Abadi LNG project status and outlook

• Abadi LNG in Indonesia targets 9.5 MTPA production with CCS from day one, a license to 2055, and production start in the early 2030s; FEED and EPC phases span about seven years, with strong Indonesian government support for permitting.

• Marketing and financing activities are progressing, with non-binding agreements exceeding planned volumes and strong interest from Asian banks, but final contracts await FEED cost and schedule clarity.

• The project aims for a mid-10% IRR, with risk management focused on execution, cost, schedule, and country risk, leveraging lessons from Ichthys and close government alignment.

• Tight EPC contractor market and local content requirements present challenges; risk-sharing among company, contractors, and government is under negotiation.

Decarbonization and new business initiatives

• Decarbonization initiatives include CO2 capture and storage (CCS), renewable energy integration, afforestation projects, and demonstration projects in Japan, with a major CCS project in the Tokyo Bay area targeting 2030 start.

• Commercialization of hydrogen and ammonia projects is supported by Japan’s new CfD subsidy scheme and the Hydrogen Society Promotion Act, with key projects in Niigata, Nagaoka, Tohoku, and Chiba Prefecture.

• Project viability depends on government subsidies and carbon pricing mechanisms; without these, projects may be slowed, downsized, or combined, but outright discontinuation is unlikely.

• Internal carbon pricing is used for project evaluation in regions lacking regulation; cost estimates for CCS in Japan are JPY 20,000–35,000 per ton, with cost allocation among emitters a key issue.

• In Australia, regulatory mechanisms require annual CO2 reductions or purchase of credits, making CCS economically preferable to buying credits.