Floating Production Intelligence

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Inpex Books $1.3B Writedown on Australian LNG assets, Omitting Ichthys

August 6, 2020

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Japan's biggest oil and gas company, Inpex Corp, booked charges of 140 billion yen ($1.33 billion) on its liquefied natural gas (LNG) projects in Australia, it said on Thursday, due to a slump in prices caused by the coronavirus pandemic.

The losses bring to more than $13 billion the charges on Australian LNG projects taken by energy companies due to the collapse in prices from the pandemic. Australia is one of the world's largest exporters of LNG.

Oil and gas majors such as Shell and BP have written down tens of billions of dollars on oil and gas assets elsewhere in the world as pandemic lockdowns have cut travel and industrial activity, crushing demand for fuels.

Most of Inpex's writedown, about $1.2 billion, was on its stake in the Prelude floating LNG project operated by Shell off northwestern Australia.

It also announced charges of $500 million on U.S. oil projects, while releasing first-half earnings.

Inpex did not book any writedowns on the giant Ichthys project that it operates in Australia.

In July, France's Total, which holds a stake in Ichthys and the Gladstone LNG project operated by Santos, said it would take a charge of $800 million on its Australian LNG assets, without giving details.

For the six months through June, Inpex said it had a loss of 121 billion yen, versus a profit of around 69 billion in the previous period. The company forecasts a full-year loss of 136 billion yen.

Asian spot prices of LNG have nearly halved this year after recovering slightly from lows in June, while oil prices rose for a fourth straight month in July from the depths of April, when billions of people were in lockdown worldwide.

Many countries are now experiencing a second wave of infections.

 ($1=105.4600 yen)

(Interactive graphic tracking global spread of coronavirus: open https://tmsnrt.rs/3aIRuz7 in an external browser.)

(Reporting by Yuka Obayashi Additional reporting by Aaron Sheldrick)

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