INPEX to invest $5-6 bln in Australian LNG project

TOKYO, Apr 10 (Reuters) Japanese energy developer INPEX Holdings Inc. said on Monday it planned to invest billion to billion to produce liquefied natural gas (LNG) off the northwest coast of Australia to meet rising demand.

The news boosted shares in INPEX, created a week ago by the merger of Japanese oil developers INPEX Corp. and Teikoku Oil Co., by more than 6 percent in morning trade.

INPEX aims to start producing the gas in 2012 after seeking an environmental examination by the Australian government this month, a company spokesman said. It plans to produce 5-6 million tonnes of LNG a year to import to Japan, he added.

''The project will allow INPEX to make great use of Teikoku's skills on LNG,'' Okasan Securities analyst Yoshihisa Miyamoto said.

''The timing also shows the management's ability to quickly do business, and this should affect the stock positively.'' Japan is the top LNG importer, absorbing about half the global supply of the clean fuel each year. LNG is gas that has been supercooled into liquid form for transport by tanker. A single shipment can deliver enough gas to supply a city the size of London for a week.

INPEX had said in the past it was considering a number of development schemes for its 100-percent-owned Ichthys discovery in the Browse Basin, Australia, including LNG exports.

The company, which aims to lift its production by 50 percent to 560,000 barrels of oil equivalent per day by 2009, is also planning a 3- to 5-million-tonne-per-year LNG export project for its Masela gas discovery in Indonesia, starting in 2010.

''Demand for LNG has been increasing because of its environment-friendliness and high oil prices,'' the company spokesman said, adding that electricity and gas providers would be the major buyers.

Shigemi Nonaka, chairman of Polestar Investment Management Co.

Ltd., said the share move underlined the market's keen interest in the oil developer.

''INPEX is a company that investors pay very close attention to after oil prices have risen so much, and it is not surprising to see it getting this kind of attention at the moment,'' he said.

''There are also expectations that oil prices will remain high for some time, and that also could be boosting its popularity,'' Nonaka added.

LNG prices have been high, driven by an unusually frigid winter and European outages.

In late January, Kansai Electric Power Co., Japan's second-largest utility, bought an Oman LNG cargo at above per million British thermal units (mmBtu), thought to be the highest spot price ever paid in Japan, industry sources have said.

South Korean importer KOGAS was said to have paid more than per mmBtu for another Oman cargo, with both companies scouting for more supplies to build up stocks, the sources said.

Shares in INPEX rose 6.03 percent to 1.23 million yen by midday.

The Nikkei average was down 0.53 percent.

REUTERS PV BS1141