Inpex to Miss 2020 Oil and Gas Production Target, Bernstein Says

Inpex Corp., Japan’s biggest energy explorer, will miss its target of producing 1 million barrels of oil equivalent a day by the end of the decade, according to Sanford C. Bernstein & Co.

Oil and gas output, which has been at about 400,000 barrels a day for the past seven years, will climb to 500,000 by 2017 and approach 740,000 by 2020 after Inpex starts producing condensates at Kashagan in Kazakhstan and the Ichthys and Prelude liquefied natural gas fields off Western Australia, Neil Beveridge, a Hong Kong-based analyst at Bernstein, said in an e-mailed report today. The Abadi gas field between Australia and Indonesia will be approved too late to help Inpex meet its goal, according to the report.

“Abadi should be the next major project approved, with a final investment decision expected in 2014, but this is not sufficient for Inpex to reach their long-term target,” Beveridge said.

Kashagan, which has experienced “severe schedule delays and massive cost over-runs,” is due to start up as late as early 2014, according to the report. “While Inpex’s equity share in Kashagan is only 8.5 percent, Kashagan will be a near-term driver of production growth,” Beveridge said, estimating that the site will account for more than 6 percent of Inpex’s production by 2015.

Inpex’s extension of the Mahakam production sharing contract, or PSC, in east Kalimantan, Indonesia, beyond 2017 when it expires is “not a foregone conclusion,” Bernstein said in the report. “While we do not expect the Indonesian government to let the PSC lapse, we do expect a relinquishment of up to 50 percent of equity to Pertamina as part of the terms for further extension.”

Inpex and Total SA have been developing the project since 1970 and Japan is a major buyer of LNG from the Bontang plant, which gets supply from Mahakam, he said.