Japan's Inpex eyes LNG bunkering joint venture with Adnoc

A subsidiary of the energy company was awarded an onshore block on Sunday for Dh646 million

Mr Ueda, left at the signing ceremony with Dr Al Jaber. The Japanese firm won a 35-year exploration rights to the block, which straddles Abu Dhabi’s border with Dubai. Courtsey: Adnoc

Japan's Inpex will look to finalise a joint venture with Abu Dhabi National Oil Company on liquefied natural gas in the UAE and Southeast Asia “as quickly as possible”, after picking up an onshore block for Dh646m in Abu Dhabi.

"We had already signed an MoU with Adnoc about LNG bunkering, so I think there might be a lot of potential. We would like to quickly establish a joint venture with Adnoc in this area, so we can get enough demand," Inpex president and chief executive Takayuki Ueda told The National in an interview in Abu Dhabi.

"Equal partnership seems to be desirable," he added when asked about the terms of a possible partnership.

Japan's Inpex is a long-term investor in Abu Dhabi's hydrocarbons industry, which accounts for 4.2 per cent of the world's crude production. The firm, which first began partnering with the national oil company in the early seventies, signed a preliminary agreement with Adnoc last year to use LNG as a bunkering fuel. With the 2020 onset of regulations for low-sulphur fuel as set by the United Nations' International Maritime Organisation, the use of sulphur-free LNG as a fuel on non-LNG ships is expected to see an uptake.

The Japanese firm saw opportunities for greater expansion in the LNG bunkering business in Abu Dhabi and the region, said Mr Ueda.

Inpex, which has a mid-term capital expenditure plan of around $1.2 billion from 2018 to 2022, will look to ramp up investment this year if the price of Brent remained at more than $60 per barrel, he added.

The energy firm will look to bid in future licensing rounds in Abu Dhabi and is also interested in developing the emirate's unconventional gas resources - a sector in which the firm has begun investing recently in the US.

"We're just trying to enter into the US shale business. In terms of developing unconventional oil and gas, in Abu Dhabi there is a potential," said Mr Ueda.

Earlier this month, the Japanese firm through a domestic subsidiary reached an agreement with GulfTex to acquire producing assets in the Eagle Ford shale basin in the US.

On Sunday, Adnoc awarded onshore block exploration rights to Inpex as part of its first ever competitive bid round.

Jodco Exploration, a subsidiary of the Japanese firm, will hold and manage interest in the Onshore Block 4 as part of its 35-year concession deal.

The Japanese firm will hold a 100 per cent stake during the exploration phase in the block, which straddles Abu Dhabi’s border with Dubai and stretches across an area of 6,116 square kilometres.

“For over 40 years, Inpex, along with its subsidiary Jodco, has been a strategic partner to Abu Dhabi and Adnoc,” said Adnoc group chief executive and UAE minister of state Dr Sultan Al Jaber.

"Today’s agreement, following a competitive bid round, extends that long-standing partnership between one of the world’s leading oil and gas resource holding countries and the third largest global economy, and represents an attractive and strategic opportunity for both parties that will deliver mutual benefits."

Inpex will have the opportunity to develop and produce any commercial discoveries, with Adnoc having the option to hold a 60 per cent stake during the production phase.

Following its latest award, Inpex will also appraise two existing undeveloped fields in the concession area - Ramhan and Hudairat. The block’s proximity to existing producing fields Al Dabb'íya and Rumaitha, as well as the offshore Umm Al Dalkh, suggested “promising potential”, Adnoc said in a statement on Sunday.

The first phase of development would take four years and would commence in 2019, said Mr Ueda.

Last year as part of its re-allocation of blocks belonging to the Adma-Opco concession, Adnoc awarded Inpex a stake in the offshore Lower Zakum field. The Japanese firm is working with France’s Total, China National Petroleum Corporation as well an Indian consortium led by ONGC Videsh to raise production from 300,000 barrels per day to 450,000 bpd over the next 10 years.