Inpex in Prelude LNG deals

Japanese player Inpex has reached preliminary deals to sells its portion of liquefied natural gas from Shell’s giant Prelude FLNG project off Australia to a pair of compatriot companies.

Inpex signed a heads of agreement on Thursday with both Tokyo Electric Power Company (Tepco) and Shizuoka Gas for the offtake of LNG from the project off Western Australia.

Inpex has a 17.5% stake in Prelude, which is operated by Anglo-Dutch supermajor Shell on 67.5%. Korea Gas holds 10% and CPC of Taiwan 5%.

The equity portion of Prelude LNG due to Inpex is 630,000 tonnes per annum and Tepco has signed up to 560,000 tpa for eight years, while Shizuoka will get 70,000 tpa for that period, Inpex said.

The deals, if firmed up, will begin in 2017 when production will commence.

This is the first time Inpex has agreed to sell LNG from a floating LNG project.

Industry sources have put the project cost at between $12.6 billion and $13 billion, inclusive of the floater, the hull of which has already left Samsung Heavy Industries in South Korea.

The field is expected to produce around 800 million cubic feet per day of gas from seven wells, with no injection. Annual output is forecast at 3.6 million tpa of LNG, 1.3 million tonnes of condensate and 400,000 tonnes of LPG.

The project will exploit the Prelude and Concerto fields that have estimated reserves of about 3 trillion cubic feet of liquids-rich gas.

Drilling of the first Prelude production well started in mid-September last year and this drilling campaign is being supported out of Broome, Western Australia. The development drilling programme will be followed by installation of the subsea equipment on the seven wells at the field.

Separately on Thursday, Shell said it had agreed a deal with Chubu Electric Power to supply the Japanese utility with up to 12 LNG cargoes a year over the next 20 years. The supermajor did not specify, however, if the gas would be coming from Prelude.

This is the first long-term LNG agreement between the pair.

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