Page 3 of 3 Japan's quest for Bigger
Oil By
Hisane Masaki
the field had been
originally targeted to start in 2005, but that
date was revised to 2008. Eni recently confirmed
investors' fears about further delays and cost
overruns and said the Kashagan oilfield won't
begin pumping until the second half of 2010, a
full two years later than had previously been
claimed.
Last August, Inpex Holdings and
Nippon Oil, Japan's largest oil wholesaler,
announced an agreement to increase their cross
shareholdings with an eye on
launching joint oil developments. Inpex Holdings
now holds a 1% stake in Nippon Oil, while the
latter has a 4.28% stake in the former.
Last December, Inpex Corp and Mitsui Oil
Exploration Co jointly won a license for an oil
block in Libya, in which the Inpex Holdings
subsidiary, an operator, has an 85% stake and
Mitsui has 15%. The 113-3/4 block is near Libya's
western border. Inpex Holdings has stakes in three
other blocks in Libya. In October 2005, Inpex Corp
acquired the 42-2/4 block jointly with Total,
while Teikoku Oil Co, which was still independent
at the time but merged with Inpex Corp later,
acquired the 81-2 and 82-3 blocks jointly with
Mitsubishi Corp.
Most recently, a
consortium comprising Total and Inpex Corp was
awarded the South East Mahakam offshore
exploration block in the Mahakam Delta, off East
Kalimantan in Indonesia, early last month. Inpex
Corp has a 50% participating interest in the block
and Total is the operator with the remaining 50%
interest.
Inpex Corp has interests in
several other blocks in Indonesia, including a
100% interest in the Masela block in the Timor
Sea. Inpex Corp is also participating in the
development of the Berau block, a principal block
in the multibillion-dollar BP-led Tangguh LNG
project. Japanese firms have a combined stake of
45.88% in the Tangguh project, with MI Berau BV, a
joint-venture company between Inpex Corp and
Mitsubishi Corp, owning 16.3%.
In
Australia, Inpex Holdings is participating in the
development of several blocks through its
subsidiary Inpex Corp, including Block WA 285-P,
off northwestern Australia, which contains the
Ichthys gas field. Discovered in 2000, the field
is estimated to hold at least 6 trillion cubic
feet of gas. Inpex Corp acquired minority
interests in a few other Australian blocks last
year.
Inpex Corp originally owned a 100%
interest in Block WA 285-P but sold a 24% stake to
Total last year. The transfer became effective
last November after getting the Australian
government's approval. The $6 billion Ichthys LNG
project is scheduled to begin construction in 2009
and start operating in 2012. For the project,
Inpex Corp may offer part of its 76% stake in the
venture to Japanese power and gas utilities that
may buy LNG from the project, Inpex Holdings
chairman Kunihiko Matsuo was quoted as saying.
Another shakeup? Inpex Holdings
was created by putting Inpex Corp and Teikoku Oil
Co under its umbrella. The holding company has
been conceived in effect as a "national policy
corporation" designed to secure supplies for Japan
from abroad. The government believes that the
combined firm's greater size will better serve
this purpose.
METI, Inpex Corp's largest
shareholder, with a 36% stake, played a key role
in the marriage of the two developers, hoping to
foster a more powerful entity to compete with
foreign rivals. Inpex Corp absorbed another
government-affiliated firm, Japan Oil Development,
in 2004. Teikoku Oil Co was also originally
established by the government. The government now
has 29.3% of Inpex Holdings.
The
government holds sway through the presence of
former METI officials in top posts, as well as
through its unrivaled equity stake. Chairman
Matsuo is a former chief of the METI-affiliated
Small and Medium Enterprise Agency, and its
president, Naoki Kuroda, is a former head of the
also METI-affiliated Natural Resources and Energy
Agency. Matsuo and Kuroda still concurrently serve
as chairman and president, respectively, of Inpex
Corp, the posts they have held since before the
establishment of Inpex Holdings.
The new
basic energy plan approved last month stipulates
that fostering an internationally competitive
developer has become a "decisive factor" in
ensuring energy security. As things stand now,
however, the holding company of Inpex Corp and
Teikoku Oil Co is still nowhere close to becoming
an oil major that can match US and European
giants.
Inpex Holdings currently produces
about 400,000 barrels of oil per day. This amount
is not only dwarfed by the outputs of any of the
five biggest oil majors - ExxonMobil, BP, Royal
Dutch Shell, Total and Chevron - but pales before
even those of the smaller international oil
majors. Eni of Italy, for example, produces about
1.7 million barrels of oil per day, an amount more
than four times Inpex Holdings'.
The
Japanese government wants Inpex Holdings to become
a much bigger player on the global stage. The
shortcut to realizing the dream is further
consolidation of government-dominated developers.
In fact, the government plans to transfer its 50%
stake in Sakhalin Oil and Gas Development Co
(SODECO) to Inpex Holdings in the future. SODECO,
a consortium of the Japanese public and private
sectors, is participating in the huge
ExxonMobil-led Sakahalin-1 project in Russia's Far
East, with a 30% stake.
Even the future
merger of Inpex Holdings and Japan Petroleum
Exploration Co (JAPEX), another major Japanese
developer, cannot be ruled out. JAPEX is 49.9%
owned by the government. JAPEX president and chief
executive officer Yuji Tanahashi is a former METI
official who rose to the top bureaucratic post of
administrative vice minister. Some industry
observers believe that the biggest obstacle to the
possible merger of the two developers is the
personal rivalry between Matsuo and Tanahashi,
both of whom joined METI - which was then called
the Ministry of International Trade and Industry -
as career bureaucrats in 1958.
Hisane Masaki is a Tokyo-based
journalist, commentator and scholar on
international politics and economy. Masaki's
e-mail address is yiu45535@nifty.com.
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