Toshiaki Kitamura is the Representative Director, President and Chief Executive Officer of INPEX Corporation, Japan's biggest oil and gas company by market capitalisation. The Japanese government is the largest shareholder in INPEX, with a 19 percent stake. The company is committed to securing energy supply for Japan and is in the process of establishing a worldwide gas supply chain to meet demand in the country.Prior to joining INPEX, Kitamura was Special Advisor to the Ministry of Economy, Trade and Industry, Japan, and Executive Advisor to Tokyo Marine & Nichido Fire Insurance. He also served as Vice Minister for Internal Affairs, Minister of Economy, Trade and Industry, and as a Visiting Professor of Waseda University, Japan. He joined Inpex in 2009 and became President in 2010.
Q1: Given the discussion on energy mix in Japan in 2030, how do you see the country's energy policy shaping up in the coming years"Basic Principles towards a proposal defining options for an Strategy for Energy and the Environment", outlined by the Council in December 2011.
Following these proposals, the Council presented the "Options for Energy and the Environment" in June 2012. A national debate of these options ensued and the Council subsequently released the "Innovative Strategy for Energy and the Environment" on 14 September. The Strategy states that "the government will mobilise all possible policy resources to such a level as to even enable zero operation of nuclear power plants in the 2030s."
After the publication of the Strategy, the Cabinet adopted a policy on September 19 which states that "the Japanese government will pursue future energy and environment policies with flexibility, constant verification and review through engagement with relevant municipalities and the international community, and will seek the support and understanding of the public." It is considered that the direction of Japan's energy and environment policy will be further examined in the light of Cabinet's adopted policy.
In the meantime, the Energy and Natural Resources Advisory Committee's Fundamental Issues Subcommittee outlined four basic directions in the "Major Points of Discussion towards a New Strategic Energy Plan" on 20 December 2011 including--1) Fundamental reinforcement of energy and electricity conservation measures; 2) Maximum acceleration to develop and utilise renewable energies; 3) More effective utilisation of fossil fuels including a shift to natural gas; and 4) Reduced dependency on nuclear power wherever possible. There is a certain level of consensus around these points and would in fact lead to a strengthening of the policy including additional measures for enhancing energy conservation, expanding renewable energies and shifting towards natural gas.
In addition, METI published a "Strategy to Secure Natural Resources" on 6 June 2012 as part of the "Innovative Strategy for Energy and the Environment". This Strategy emphasises the extension of interests in large-scale oilfields and the exploitation of three frontiers, the development of an LNG import channel from North America and the expansion of Japanese-led LNG projects as measures to secure oil and natural gas resources. Given the lack of domestic resources and direction towards reduced dependency on nuclear power, these measures are imperative at any rate. As Japan's largest oil and gas E&P company, INPEX is well-positioned to implement these measures and will make every effort to do so.
Q2: What is your outlook on LNG imports and prices for Japan and Asia"LNG Producer-Consumer Conference" which is the first global conference of LNG Producers and Consumers hosted by METI on 19 September this year.
The future Asian LNG pricing discussion supposed that the market will determine and conclude the ultimate pricing by taking various factors into consideration. It is obvious that LNG projects require a huge capital investment including financial arrangements, buyer's commitment to long-time offtake arrangements and the mutual relationship between the seller and the buyer. This leads the producer to guarantee the buyer a stable supply of LNG over a long period, say 10-15 years. Thus, it is essential to consider how to reach mutual agreement on future LNG pricing between sellers and buyers given the aforementioned LNG business characteristics.
Q3: What are the challenges for Inpex in securing overseas energy assets to cater to rising demand"Medium- to Long-Term Vision of INPEX" announced in May 2012, which outlines how we plan to robustly seek to increase INPEX's production volume and reserves and to enhance our global assets portfolio.Consistent with this plan, we established a New Ventures Division this year which will focus on identifying and acquiring new projects, assets, and opportunities.
The New Ventures Division, with the support of our Regional Project Divisions, overseas offices, and Technical Division, will continue to focus on exploration and development in our core regions of Australia and Southeast Asia, and promising areas around the globe. At the same time, we will be seeking active participation in deep water blocks and pre-salt layer in South America and Africa where large-scale reserves could be expected.
Q4: Renewable energy is likely to play a growing role in the global energy mix. Are renewables a focus of new business planning for INPEX"Medium- to Long-Term Vision of INPEX" announced in May this year. This includes promoting commercialisation of geothermal power generation and reinforcing R&D initiatives, for example CO2 recycling, including the hydrogen utilisation technology.
Geothermal power generation is a key renewable energy source in Japan, which has potential geothermal energy resources to be ranked the third in the world. Thus, the Japanese government is considering deregulating and expanding support for this promising renewable energy. Also, tapping into exploration and drilling technologies nurtured through oil and gas development, we are carrying out studies in Hokkaido, Akita and other regions aiming for viable business operations of renewables. Reinforcing R&D activities, we will proceed with basic research on CO2 recycling technologies (conversion into methane, etc.) with the use of microorganisms and photo catalysts.
We will also explore the business potential of various types of renewable energy, implement initiatives for promoting energy-efficient fuel cells, work on photovoltaic power generation and the development of efficient lithium-ion battery technology.
Q5: UNESCAP's under-secretary-general Dr Noeleen Heyzer spoke about the Asian energy highway recently, referring to a more integreted regional power system that could promote a greater share of renewables and clean energy for the region. What is INPEX's view on this proposed "highway"?
Kitamura: It is clear that the stable supply of electricity and the system to support this is crucially important for economic development in Asia, which will play a leading role in the expansion of the world economy over the coming years.
Indeed, we expect that the Japan's efficient and environmental-friendly technological advancement and technical know-how may support the efficient and stable supply of electricity in Asia's developing markets.