Japan’s Inpex worried on gas even as gears up for green spend

Inpex aims to develop the Cash-Maple gas field in the Timor Sea which it acquired jointly with Ichthys partner TotalEnergies, in a deal in August to supply replacement gas to Ichthys LNG when its existing supplies run down.

The field, targeted to start production in the mid-2030s, would be captured by the new safeguard mechanism rules requiring net-zero emissions for new gas supply projects for existing LNG plants. This has pushed Japan to make formal inquiries with the Albanese government on how LNG supplies critical to its national security may be affected.

Mr Murayama said that when it came to the safeguard rules, it was the retrospective nature of how they are being applied to already sanctioned projects like Barossa that was the biggest worry.

‘Greater anxiety’

“What disappoints us a lot is that you know, this new regulation applies to already sanctioned project like Barossa, Scarborough,” he said. “This gives us a greater anxiety of the regulatory framework.”

Still, Japan’s nerves over the increasingly hostile policy environment for gas in Australia has not tempered Inpex’s ambitions to expand into renewables through its 50:50 partnership in Enel Green Power Australia. The deal in August valued the Enel subsidiary at about $650 million, including debt.

Mr Murayama said Inpex regarded Australia as an important contributor to its global target of reaching between 1 gigawatt and 2 GWs of renewable power generating capacity by 2030. The group expects to invest between $US7 billion and $US10 billion in the next 10 years in net zero business areas, including renewables, carbon capture and storage, hydrogen and carbon farming.

“Australia is the most important core business area for Inpex … we will continue to operate Ichthys LNG for the next 30, 40 years,” he said.

“At the same time, we have to contribute to Australia’s renewable target, which is 82 per cent by 2030. So as a private business, we invest, and we need to make profit, and at the same time keep social licence to operate here in Australia. So, I think it is essential for Inpex to invest in the renewables area.”

Energy retailing ambitions

Mr Esposito said the backing of Inpex would accelerate Enel’s expansion in renewables in Australia, where its growth so far has been hampered by issues around grid capability and connections, but also capital allocation given Enel’s diverse presence.

He said Enel saw “huge opportunity” to develop a vertically integrated business in Australia, involving renewable energy generation and storage through to retailing. It would initially target commercial and industrial customers, potentially moving to households long-term.

Mr Esposito said the full commitment of two global players to merge their efforts in the energy transition in Australia would allow for accelerated development beyond the existing 5GW of capacity in Enel Green Power Australia’s project pipeline, which is needed anyway to offset projects that do not make it through to development.

“We already secured five gigawatts of pipeline. To reach the goals that we have, I think we have to double or even triple this capacity,” he said.

“We are aware that the [project] mortality rate – not only in Australia, but all the countries – in the experience of Enel for one project that will succeed there probably will be a couple that will die. And so, for each technology, and for each jurisdiction, we try to double or even triple our presence in terms of pipeline.

“For this reason, we are securing land, starting from greenfield projects in all the states.”

So far, the EGPA portfolio includes 310MW of operating solar power capacity, in South Australia and Victoria, as well as 285MW of late-stage development assets. The 76MW Flat Rocks wind farm in WA is under construction, as is the 93MW Girgarre solar project in Victoria, one of the few large-scale renewables projects in Australia to start construction this year.

Mr Esposito said he expected the jointly owned business to in future be bringing projects to maturity every year.

For Inpex, the Enel Green Power Australia investment sits alongside a venture with ANZ and Qantas in carbon farming and renewable biofuels, and a proposed carbon capture and storage project at Ichthys, which hinges on securing approvals from NOPSEMA.

It wants to have carbon capture and storage in place at Ichthys by 2030.