Inpex expects net profit to plunge on low oil prices

Japanese LNG project developer Inpex expects 26 billion yen ($235 million) in net profit for the fiscal year ended March 31, two times lower than its previous forecast of 52 billion yen.

The company said in a statement on Tuesday it expects to book 67 billion yen ($606 million) in impairment charges for the fiscal year following the steep decline in global oil and gas prices.

In light of “deteriorating business environments” Inpex will recognize losses on its assets located in the U.S. Gulf of Mexico, offshore Angola, Canada, the Timor Sea, and other upstream projects, mainly in production, the company said.

Credit rating agency Moody’s said in March it had downgraded Inpex’s credit rating to A2 from A1 saying that the company’s profitability will “deteriorate significantly as a result of sustained low oil prices” .

“The company’s weakened profitability, combined with rising adjusted debt related to the company’s major Ichthys LNG project, in turn will weaken its key credit metrics over at least the next 18-24 months and likely past this point,” the report said.

Inpex is also facing challenges in Indonesia as the country has recently decided to move the multi-billion dollar Abadi LNG project proposed by Inpex and Shell from offshore to onshore.

To remind, the Japanese company said on Monday it has been instructed by the Indonesian government to re-propose a plan of development for the Abadi gas field based on an onshore LNG plant instead of the planned FLNG project.

1 Japanese yen = 0.009063 U.S. dollars

LNG World News Staff