We would like to start the earnings call of INPEX Corporation. Thank you, everyone, for coming despite your busy schedule today. My name is Yoshihiro, General Manager of the Corporate Communication Unit, and I will serve as the emcee for the meeting today. Please allow me to introduce the attendees from INPEX Corporation. We have Mr. Takayuki Ueda, Representative Director, President and CEO. We have Director, Senior Managing Executive Officer, Senior Vice President, Mr. Daisuke Yamada. We have Director, Managing Executive Officer, Senior Vice President, Mr. Toshiaki Takimoto. For the program today, we will spend about 35 minutes to give the presentation, and spend about 25 minutes for Q&A, 60 minutes in total. Today's session will be held in a hybrid manner, with our online participants, with simultaneous interpretation provided for Japanese and English. For those people participating through Zoom, please select the language of your choice.
Also, for the presentation material, please choose the language from the button at the top of the screen. Mr. Ueda will first give the business overview, and Mr. Yamada will then explain about the consolidated financial results for the six months ended June 30, 2025, as well as the consolidated financial forecast for the year ending December 2025. Mr. Ueda, over to you.
This is Ueda, President and CEO. Thank you very much for coming despite your busy schedule, as well as the rain, the weather, the first time in a while. Please allow me to report the business overview. Please look at the first page. The overview for the first half of the year. In regards to the detailed numbers, Mr. Yamada will explain later. We ended up with JPY 223.5 billion, improving by about JPY 10 billion.
Despite the volatile external environment, I think we have been able to realize the profit pickup. Above all, the stable operation of the Ichthys LNG is a big factor, and we were able to ship 12 cargos per month for three consecutive months this year. This is the first time that we have been able to ship at that rate on record. In the second half of the year, the oil price and the FX remains to be very volatile. There are uncertainties, but we are expecting stable operation. For the full year, we are expecting JPY 370 billion of profit. This was the upward revision that we have made for the forecast Ichthys LNG. We have a scheduled shutdown maintenance and a large milestone. We have started the FEED work for Abadi LNG.
There are various risks, and you can see the numbers shown on the slide. What we are often asked about is the risk regarding the U.S. and the Middle East. As you can see on the slide, we currently do not operate in the United States, and we do not export to the U.S. either. There is only a very limited impact directly. Based on the portfolio for us, which is centered around Oceania and Asia, we are likely to receive the impact. Abu Dhabi, the project continued to perform quite stably and have not experienced any major issues. As for the oil price, we have seen volatility continue. If you look back over the first half of the fiscal year, despite it being unstable, it was still relatively stable.
At the end of the first half of the year, the average was about $70 a Brent. That was the average for the first half of the year. This was stably higher than what we had expected. Going forward, there are still a lot of uncertainties, but what often is talked about is the impact of the Trump tariffs from the state will have impact on the global economy, and that could potentially push down the oil price. Or OPEC+ has announced that they are going to ease, reduce their production, and that could potentially cause the price to come down in terms of oil. But the Asian economic condition remains to be quite strong based on certain opinions and geopolitical risks like the Ukraine conflict. There are those certainty factors, and those are likely to continue.
When you look at the futures market, it hasn't really come down very much. The assumption for oil price going forward, despite the volatility, we will probably see a gradual decline towards the end of the year at the $67. We have been able to see quite a stable profit going forward. One of the factors behind this stable profit, and this is more medium to long-term perspective, but our financial structure. There are a number of factors to change this in a number of ways. Please allow me to explain what they are. On this occasion, the year-end profit, how we are looking at this for the full year. On the left, you can see the final profit transition in the past.
The highest level was the JPY 460 billion in 2022, and the JPY 420 billion last year is the second highest. The JPY 370 billion, we are assuming for this fiscal year, will be the third highest. But the oil price has been higher or the yen may have depreciated, so there were various factors. What we are showing on the right here, we are expecting a 69-year average for the full year for oil price, $70, in the first half of the year. 65 years for the second half of the year, the average is $69 on a Brent. FX is 147, is what we are assuming for the full year.
What you can see on the right is that if in the past years, if the oil price and exchange rate is what we are assuming for this year, $69 and JPY 147, then we looked at the sensitivity, and we have evaluated the past profit on those bases. It's not a strict number, it's a rough number. But if we do that kind of calculation, as you can see, the JPY 370 billion this year would have been the highest profit level in comparison to the past. A couple of years ago, the JPY 260 billion or JPY 220 billion, that was the prelude, the impairment and so forth. Apart from that year, it has been increasing gradually. When you actually adjust for the FX as well as oil price, this year's final profit is at the highest level.
One of the factors behind this is what we have named as Profit Boost 500, which is essentially enhancement of structural and medium-term profitability. This is what I wanted to explain. We are expecting a profit contribution of about JPY 50 billion per year. It is not just a one-off impact, but this is something that will continue structurally over the medium term. If we see this continue for 10 years, that is JPY 500 billion of positive impact that we can expect from this reform. What is this? There are a couple of reasons behind this. First is, as you can see on the slide, this is a foreign exchange gain from INPEX paid-in capital reduction. As you know, INPEX is operating very stably right now, and in the past. The investment we made in Australian Exploration Company.
We are now in the stage to recover the profit. That is the judgment we made, and in two years' time. We started the FEED, but that was a body. We are in a position to start building up some reserve and so forth. Part of the investment that we made in Australia, we are essentially undertaking the paid-in capital reduction from Australia to Tokyo. There is no PL impact because we are just transferring the money. Because of this, we end up registering the foreign currency gain, and this is about JPY 20 billion. It does fluctuate from year- to- year based on the increment of the past exchange date. We will continue to engage in this paid-in capital reduction. You can consider this as being a long-term factor.
Another factor is the investment incentive effects in Europe and Middle East regions. I cannot talk about the details because of the contract with other counterparties, but there is an incentive effect. Whether it be Middle East or whether it be in Europe, we are expecting the incentive effect of around JPY 30 billion per year. In total, that is about JPY 50 billion of impact we are expecting on an annual basis. The excess paid-in capital reduction with excess is something that we have finally been able to agree to with the accounting auditor this year. It is not included in the medium-term plan. For the investment incentive effect, it does contain part of that. Put together, that is about JPY 50 billion per year of the profit increase per year.
This is what we are expecting, and we expect this to continue for around 10 years. For this year, as you can see at the top, JPY 58 billion out of the JPY 370 billion comes from this impact of profit they recognize on the P&L on that basis. I can explain this from a different perspective. It is the same thing, but the ability to generate profit with regards to the oil price or the exchange rate, we have been able to improve our resilience.
You can see both the left and right. The left-hand side is the oil price. If we set these forex at the set number, and if you look at the oil price sensitivity to gain JPY 300 billion, how much oil price we can have is shown. Until last year, as you can see on the bottom graph, to gain JPY 300 billion, the forex will be set at JPY 147. In that assumption, the JPY 300 billion profit will come from $68 of oil price, and $69 was necessary. With a $13 decline, even though in that situation, we will still have JPY 300 billion of profit. On the right-hand side, the same thing is on the forex exchange rate sensitivity with assumed Brent oil price at the set number. The oil price $69 on assumption, and how much we can gain JPY 300 billion with the foreign exchange.
We had to have JPY 147, but this time, if it is JPY 122, we can gain JPY 300 billion profit. That is shown in this graph. Therefore, the profit capability of our company comparing to the oil price with the forex, even though there is an oil price decline or the yen appreciation, we are able to have a more profit-generating capability as a company. This is not one-off, but we are able to have this over the long term, and that is what we want to mention in this slide. Going forward with the cash allocation. In the midterm plan, there are a couple of allocations we mentioned going forward. The return as well as the growth investment are the main areas for this year. $69 is the oil price and 137. The forex and the oil price is set at 147 and $69 with that assumption.
Over the next three years, what kind of cash in and cash out we will be seeing in the company is shown in this slide. Based on the current oil price assumption, you can see the cash allocation forecast. We have $70 as assumption and JPY 135 of yen dollar, and that is converted. The cash flow before allocation, exploration is about JPY 2,500 billion. There are about JPY 400 billion. Over the next three years, the cash flow will be at JPY 2.9 trillion. How we will be using this? Out of that JPY 2.9 trillion, the growth investment will be JPY 1.9 trillion. It was 1.8 during the midterm plan, and that was what we mentioned before. Today, we have JPY 1.9 trillion as an assumption.
For the shareholder return, we talked about JPY 400 billion or more before, but now we have JPY 562.5 billion or more as a shareholder returns. The cash reserve for Abadi, which is important for the FEED work. Looking at the FID in the next several years, this year and next year, we want to create JPY 400 billion- JPY 500 billion of cash reserves for the Abadi LNG development. So far this year, for the next one year, for this year, we are planning to have JPY 400 billion of the cash, and that is the current assumption today. On the right-hand side, based on that assumption, our D/E ratio is 0.3, 0.4 or less, and that is how much D/E ratio has declined. The next three years, that D/E ratio will not deteriorate largely, and that is the assumption.
The cash reserve, after Abadi FID starts, we can inject those cash reserves. How much we will do the borrowing, how much it takes for Abadi is the question, and it is not so clear today at this moment. A certain amount, we will be able to downsize the borrowing at that time, and we have confidence that over the mid to long term, our financial soundness is in place, and we can also achieve the growth in the future. That is what I would like to mention. Next is the shareholder returns. As we had the press conference before, we have the progressive dividend, and the JPY 19 in the midterm plan is now increased to JPY 100. The share buyback is in the size of JPY 80 billion. From our investors, especially for the dividend, there are a lot of expectations.
This year, we have more weight on the dividend, and that is the shareholder return for this fiscal year. Talking about the business activities, as you may already know, for Ichthys, it is going very smoothly. The shutdown maintenance is from the middle of August, and for about 1.5 months, all of the equipment will be suspended or stopped, and then we will open and do the maintenance work. For the surrounding blocks, Cash-Maple and others will be continued. For Abadi, the biggest business activities topic at the interim is that we are able to reach the FEED phase. What is FEED? It is basically a basic design. It is a huge amount of work. For the entire FEED, you have various phases, and we have to spend about JPY 1 billion in total. So, JPY 140, JPY 150 billion.
It is not just a design, but that is how much we have to spend. Mainly in four areas, we will be doing the FEED work. Four areas. One is the onshore LNG facility, the subsea pipeline FPSO, and the wells, SURF, S-U-R-F. This FPSO and the onshore LNG is the dual FEED, where in two consortiums, they are competition, and whichever is better FEED, we will be continuing to do the EPC work, the construction. So two consortiums is competing with the FEED, and whoever wins will continue the EPC. That is the assumption, and that is called dual FEED. This dual FEED with FPSO and also for our LNG, we will have this structure. Our FLNG and the two, the FPSO, the two phases will be conducted. The SURF and the pipeline will be one FEED.
In total, six FEEDs will be running simultaneously. As mentioned, the cost is quite a large amount, JPY 1 billion, and it is JPY 100 billion just for our company alone. That is a huge amount of engineering or the design that is required. This FEED, along with this FEED, there are also mainly two other activities. One is marketing, as mentioned. From various companies, we talk with our customers, potential customers. For Abadi in Asia, we have the LNG in Asia, so there are a lot of interest. On non-binding manner, we already have a lot of expectation exceeding the past production level. Together with the FEED, we have this non-binding LOIs, and turning that to the binding long-term contract is what we are doing in the marketing activities along with the FEED work. The other is financing.
The necessary cash, we have this upstream, but basically, we will do the borrowing for the downstream. For the upstream, we will have the utilized equity. That is the basic structure. Today we have a lot of good progress. Last week I went to Indonesia and we talked with the administrator to talk about the start of the FEED, and we talked about post-recovery, and we came to an agreement. We came to an agreement to proceed with the FEED work, and that is how we came to an agreement with the Indonesia government. Also because of the energy scarcity in the future, they want us to do this FEED work early as we can, and that is the situation today. The next two years, we will be doing a full scale of design work, and we will think about the financial structure.
If possible, two years later, we will go into the final investment decision, and that is the current schedule we have in mind. For Abu Dhabi, U.A.E. as a whole, 5 MMbpd by 2027. We are aligned with this schedule. In the midterm, this increase in production will be made, and naturally we have to make more investment. We will also receive those proceeds from those investment and over the midterm will be a large profit source. For the meantime, for Norway, we have acquired asset. For Indonesia, we also acquired a block, and those developments are made in other projects as well. In short, while doing those things, we would like to secure the business foundation of the midterm.
Next is effort in the energy and the resource fields, and there are a number of major movements in terms of CCS. First of all, in regards to the hydrogen, in the Kashiwazaki City of Niigata Prefecture, we are working on the integrated blue hydrogen ammonia production utilization demonstration test project. We started the commissioning operation already. Also in regards to CCS, there is also a Metropolitan CCS project. In this regard too, this was identified as being one of the metropolitan area advanced CCS projects. We have established a company called Metropolitan CCS, through which we are conducting this business. This is a project 100% funded by the national government, and over the next year, we are going to do pre-FEED and FEED, and we will start drilling wells as well.
Also, near Ichthys in Australia, we have a CCS project called Bonaparte, and this is for the sequestrating CO2 from Ichthys. Based on the assessment, this could become one of the major world-class CCS project going forward. Just recently, this has been awarded as being a major project status by the Australian government. Australia considered this to be a very important project for the Australian economic development. This was what has been considered. There is about 140, the licensing and approval process that one needs to obtain in Australia just for CCS, but that type of work will become easier as a result of this project designation. Renewable, we are conducting business in Australia with Potential Energy. We recently obtained a new asset. Right now, all together we currently have about 800 MW capacity in total.
These are the major progress. Just going back to what I said at the outset, we have the ability to make money with our profitability base making significant improvement. Large milestone is the start of the Abadi FEED. The FEED will take two years, so we are targeting profiling in two years' time. You may know about the Abadi, but how are we going to generate a profit increase in the meantime? One is the Profit Boost 500 that I referred to, and the other is we are going to make investment of that in line with the production increase on the plan. The profit from Abadi will increase alongside Indonesia, Malaysia, and Norway. Smaller, the production increase is what will continue.
Because of this structure, even during the three years of midterm management plan, we will continue to expand our profitability. Once Abadi starts production, that will become the large boost for us to achieve further growth. That is the growth strategy for us right now, and that is something that I wanted to communicate to you for your understanding today. That completes my explanation. Thank you.
As the CEO has explained, we have a high confidence over medium to long term. We have been able to strengthen our profit base. Today I would like to talk about more near term, so I'd like to talk about the first half of the year results. The result is, as you can see for the oil price, the oil price came down $12 year-on-year.
Despite the stronger yen, net profit ended up at JPY 220 billion or so. 2022 was the highest number. The first half of this year was the second highest. It was a pretty good result that we have been able to achieve. Here you can see revenue. The revenue did come down. If you look at the crude oil, it had come down at 892 to 780, and natural gas, 281 to 251. If you look at the details, the sales were good, but the oil price and the gas price came down, so that certainly had impact. The yen also appreciated. The revenue itself came down as a consequence of those. This is the waterfall chart. JPY 212.5 billion last year, the same year, and 23.5.
For the revenue, as I said, there was some reduction in royalty as well, but the acceleration expenses were quite significant. That dip came down. Also, the share of profit in investment accounted for using the equity method. This was slightly negative because of the drop in the unit price. There is also income tax, the data benefit as well. About JPY 70 billion is related to profit, the other non-profit. The taxation or the utilizing the external tax exemption and so forth. We had about JPY 93 billion returning as a consequence. The revenue coming down in a country with a high tax rate certainly had a large impact. The forecast for this fiscal year, as the President has explained, we are expecting $69 for FX and JPY 147 for FX. As for revenue, we're expecting around JPY 2 trillion.
For operating profit, more than JPY 1 trillion. The net profit is JPY 370 billion. JPY 370 billion against the JPY 300 billion that we have expected in May is an increase of JPY 70 billion, an increase of 23%, as I have explained in a previous slide. After adjusting for oil price and the FX, this is the highest level on record, growing at 7.1. This is higher than WACC. ROE, so this will be higher than the shareholders' equity cost, 8.2% in the first year. This is higher than the cost of shareholders' equity. This is the waterfall chart again. There is about JPY 200 billion benefit from market factors, increase in the sales volume. This was the strong performance of Ichthys. The foreign exchange gain from excess paid-in capital reduction is included here, about JPY 30 billion.
This is looking at this vis-a-vis May. The JPY 23 billion became JPY 30 billion essentially. R&D expenditure, this has come down slightly. As you can see on the right, the taxes related to optimization, organizational structure is included. Australian Exploration Company. This has been divested, and we just made a single company for doing the exploration. The Japanese entity is 100% investor. If we disband this company, then we can get a tax benefit in Japan. Last year, because exploration didn't go well, we had the tax benefit. This time we want to capture the benefit in Tokyo, and that is included in this JPY 24.3 billion. Next is cash flow. It is JPY 175 billion, as you can see, as a CFFO, the operating cash flow before exploration.
The cash flow from investment is JPY 703 billion, and JPY 467 billion is included as the growth strategy and remainder. This is more than three months of the securities, and it will be there for Abadi going forward. Abadi cash flow is included within this JPY 703 billion. We have the financing, the cash flow of JPY 277 billion, which includes the dividend and the share buyback to make up the number. I said that the investment is JPY 467 billion. You can see the breakdown. Pillar for growth is for the oil and natural gas and JPY 56 billion for the exploration in Norway, the thing that we have obtained, and excess of Abu Dhabi is the largest, which is for maintaining the existing data facilities.
For the second, the pillar for growth, CCS, this is about JPY 40 billion, and renewable energy is about JPY 25 billion or so. This is a breakdown of the growth for investment. This is as we have indicated in the midterm management plan, we will maintain the investment discipline, but we will make the investment in a selective way. Oil and gas, equity IRR of at the mid 10% range or the mid-teen level, that's what you're looking at for CCS and renewable energy area, around 10%. That is the investment, the criteria. If we have project less than these levels, we will not engage in it. That's the kind of judgment that we have made.
Regarding ROIC, 7.1%. We have a 1% increase, and we have 8.2%, 1% for ROE. This is Ichthys, mostly decided by Ichthys. That's why for ROIC, we have disclosed these numbers. That's all from me. Thank you.
Now I would like to move on to the Q&A session. First, we'd like to entertain questions from the room, and then we'd like to ask people from online to ask questions. We'd like to ask each participant to ask up to two questions. Those who have questions, please raise your hand at the front row. Presentation.
I'd like to ask two questions. Before I go into the question, just to explain about my question. Do you have the midterm plan and the vision? It's been six months, and we have further initiative, as you mentioned today, and also the feedback from the investors, and I think you came up with these initiatives to respond, and I think it was a good outcome. After that, I'd like to talk about Abadi, my question. First question is for the Abadi project, as Asa mentioned earlier, there was explanation about the progress today, and the FEED is going to start. Also alongside with that, we have the finance and marketing activities. One of the important point is, I'm sure it's concern about the investors, but the communication with the Indonesian government. To consider Abadi, these are the major points, the key points.
Within that, my question, for the next two years, you'll be focusing on FID, be working towards FID, but based on what you mentioned today, marketing, finance, and also with the government to gain return, the communication and those, including the tax systems. If you look at these three, from your viewpoint, Ueda-san, what is the biggest hurdle to achieve? Or what is the toughest negotiation among these three? At this point, can you please evaluate and explain your view at this moment as number one? Then on number two question, you have the booster and then the cash flow allocation on page eight was explained today, and I'd like to ask questions. For the use on the right-hand side, you have investment return and also the Abadi cash reserves. It was really clear in the explanation. I think it was really good.
Among these three, the way of thinking about the cash allocation is the question. First, you have the JPY 400 billion-JPY 600 billion of cash reserves for Abadi, and for this year it's about JPY 400 billion as a visibility. This level that you set these numbers at, is there anything that you have in mind, whatever you can disclose today, why you have this range of JPY 400 billion-JPY 600 billion for the cash reserves for Abadi? If you can ask for your thoughts around that. Along with this question, the growth investment is JPY 140 billion, and we have the shareholder return from JPY 562.5 billion or more. To take this positively, you will have the growth investment within this range, and they show the return depending on the profit, you will try to achieve these numbers or higher.
That is my interpretation, but is that correct? That is another thing I would like to clarify. Those are the two questions.
Thank you. I would like to talk about the Abadi question. Regarding Abadi, what is the toughest initiative going forward? Honestly, all of the activities are tough, but the toughest is the Indonesian government and/or with the central government to maintain that relationship and communication. As mentioned before, for Abadi, this is a remote area in the Greenfield project and high-risk project as well, to some extent. With the high IRR, the mid 10% range of IRR is something that we are requesting or seeking for. Going forward, the biggest challenge is looking at the recent market, the Abadi cost may escalate. How much escalation we will have is something we do not really know, honestly. However, most probably it will be increasing for sure.
In that case, IRR may go down and with the Indonesian government, whether we have to talk about the economics again, and if necessary, we will receive incentives. Those are the process that we have committed today. In substance, how much incentive we will have in addition, these are up to discussions in the future. Those are not something we have to decide, but those are things that we have to work with the Indonesian government, with the economics, how we are going to adjust, the project is the question. Honestly, that would be a tough negotiation as a possibility. On the other hand, with the Indonesian government, we have received their request of working on Abadi early or fast. There is an increasing demand, and there is a Tangguh gas decline, so Abadi natural gas is necessary.
In this kind of difficulty, basically, I am taking this optimistic because Abadi gas, those people who want to have Abadi gas are really a huge amount of buyers. The Asian gas compared to Middle East, there are less geopolitical risk, and it is close in distance. Abadi attractiveness is very high, and that is also necessary for Indonesia. There are so many buyers who want to buy, and then there is a project. From my standpoint, ultimately, we think we can proceed this, and that is the current view we have. For Abadi's cash or the fund, we have a cash reserve of JPY 400 billion to JPY 600 billion. How much it takes for Abadi project is the question. In 2018, we talked about JPY 20 billion of cash necessary for Abadi, but that is basically based on 2018 figure.
After that, additional CCS and cost increase may lead to several tens of percentage of increase. Abadi finance is split between upstream and downstream. For the upstream, the so-called capital will be used. It is about half upstream and downstream. Downstream is the LNG facility, liquefaction facilities, and that is about half. For the downstream cash, it will be doing borrowings, trustee borrowing. That is the structure we will be using. For the upstream, we will be using our own funds, and those are the current assumption. It is about less than half of the entire amount of investment, and we have about 65% share. Most probably for the Indonesian government, 10% will be given to the Indonesian local party. Ultimately, we will have 50% in the end, and that is the current assumption. From that total perspective, our company necessary cash will be limited.
To some extent, some part of that cash is between JPY 400 billion to JPY 600 billion. There are a lot of detailed calculation, and how much it requires is not so clear, so it is hard to say in detail. In terms of how we are working in our minds, that is how we came up with this number, JPY 400 billion to JPY 600 billion. Thank you very much.
Is the Profit Boost JPY 500 billion, which is a new thing that came up on this occasion. You talked about the foreign exchange gain from Ichthys paid-in capital reduction of JPY 25 billion. This will change from year to year, but you said JPY 500 billion for 10 years cumulatively. You expect this to do this over 10 years. When you do extra paid-in capital reduction, it will run out in the end, but is it something that will discontinue for 10 years or more than 10 years? Also, you have also said that JPY 30 billion for the investment incentive effect, and this is quite a large amount. Could you give more detail? Of course, there are confidential information that you cannot talk about, and that is okay, but if you could give a little more explanation about the investment incentive effect.
Second question is that for now, the net production volume, I understand that this is increasing. What is the reasons behind this pickup in the net production? Is it based on your own effort or is it that the crude oil price has come down, so the amount of the oil handed over has increased? I wanted to understand whether production increase is purely due to the increase in production itself.
Please allow me to talk about Profit Boost. We wanted to give a catchy name so that you can remember this. In regards to the paid-in capital reduction, this is something that we have referring to from last year, and we have been discussing with our accounting auditor, and we have been able to do accounting treatment, and we are able to do this.
As a consequence, we have been able to include this in our plan. Last year was zero. This year onwards, this will be included. This is essentially, as we have explained previously, there are two factors as to why we are able to do this from accounting perspective. First is that INPEX is now in a stage of recovering investment. This has been recognized in discussion with our accounting auditors. We are now able to recoup the capital back to Tokyo. Second is Abadi. Abadi, the FEED has started, and so this means that we have made an official start in regards to the Abadi project. For us to invest in Abadi, and then from Australia to Japan, there is now the requirement for us to move money.
From Australia to Japan, we have been able to do this, the capital reduction, essentially, a transfer. Putting aside whether this is by chance or not, there is now a foreign exchange gain. When we invested in INPEX, it was JPY 85. We have been able to recycle this on a P&L for FX. This year was about JPY 31.1 billion or so. It is not the case that it is perpetual, because it is important that the oil price and the FX to be at this level. FX is very important, but oil price is also important because we have upstream and a downstream company, and there are free cash flows, and that is actually moved to the interim holding company, and then we will do capital reduction from there. The free cash flow amount is the upper limit.
If you want to do JPY 300 billion a year, you cannot do that. We can only do this within the scope of free cash flow when it comes to the paid-in capital reductions, and we are able to get the foreign exchange gain associated with that. When you look at the common current, the translation adjustment, we are able to do this for 10 years. In the meantime, what will happen to the FX and what will happen to the oil price, and also free cash flow, this will be determining factor, but it may continue for more than 10 years. On rough basis, we should be able to enjoy the different currency gains for around 10 years.
We said about JPY 500 billion for the 10 years, and we feel that that is the kind of the profit-based enhancement over the medium term. In regards to the investment effect, this is mainly for Europe and the Middle East by us investing. Of course, there are investment provided in various countries, but an investment, the incentive effect, this was something that we were able to generate in the past as well. There will be incentive benefit. There is an increase in delta vis-a-vis the previous midterm management plan. We are expecting this to be about JPY 30 billion per year. Now, it is difficult for me to talk about the details. If I actually try to break this down further, it would be a little bit of problematic. Please understand based on what I am saying.
This is based on the actual cash flow, the actual investment plan, and the actual incentive. We need to actually multiply those factors. When we look at it, we expect this to continue for around 10 years, that incentives continue for around 10 years. That is JPY 30 billion per year, JPY 300 billion over the 10 years. I apologize for not being very succinct in my response, but that is all I can say. In terms of production volume, please allow me to explain. The production volume in the second quarter was 673,000 barrels per day of oil equivalent. The second half is 690,000. That is around 842,000 for the year. That is about 10,000 increase in terms of production volume.
This is not due to offtake increasing, but it is very strong performance from Ichthys through the second quarter.
As the CEO explained, Abu Dhabi as a nation is increasing production volume, and that benefit is also shown here. That is about 10,000 barrels per year. We are seeing the production volume, the core ability improving. If you could understand it in that way. That was very clear. Thank you very much.
Next person.
Thank you very much. This is Soweta. Once regarding the paid-in capital decrease, I think it is good to have increase in profit from our standpoint. This means you will have profit increase, and that means you will have more tax payment. Regarding that tax, what kind of discussions were made internally upon making this paid-in capital reduction decision?
First, like you mentioned, this is where we have Forex gain, and with the Forex gain, that means there will be tax payment. Our tax structure is very complicated, and there is the deduction. How much loss we will have is really hard to forecast. The Forex gain plus this is exactly where we have to do the tax management. However, based on the tax system, there are a couple of areas where we can book loss.
Because of the general deduction, if you miss the timing, it is not really so effective. From that standpoint, there are a lot of loss on a tax perspective, and using that loss, we would like to maximize the Forex gain as much as possible. Depending on the environment, this largely changes. From the initial, we cannot be planned, and it is like we have to really see how it goes. How much gain we can achieve is something we have to manage well. As much as possible, we would like to lower the tax rate as much as possible, and that is how we like to bring the situation going forward. Thank you very much.
Regarding Profit Boost JPY 500 billion. Because you have named it the Profit Boost 500, I would assume that you are thinking of JPY 500 billion. Of course, it does depend on the crude oil price and FX rate, and so it is not the case that you have committed to JPY 500 billion. Were you mindful of this JPY 500 billion in giving this name? I think the incentive portion, I think is quite strong. When you think about foreign exchange gain from the paid-in capital reduction, depending on the FX rate or how much you reduce, do you try to realize JPY 20 billion every year based on that, or will you do a kind of dollar-based operation with a JPY 20 billion like this year? Depending on how much you register on a P&L in Japanese yen would differ.
What will be your focus on this regard going forward? That is the first question. The second question is the JPY 100 of dividend. What is your thought behind this? The CEO said that the investor tended to prefer a dividend. You said that mindful of the dividend level based on this. But were you mindful of the Profit Boost 500? Was that worth JPY 370 billion, or is that the total return ratio? You probably will say that you thought of all of these factors, but you have declared progressive dividend payment, and to go up to JPY 100 of dividend needed quite a courage. So your thoughts behind this JPY 100. And what is the kind of dividend levels that we should expect going forward? These are my two questions.
Please allow me to respond to the first part. Profit Boost 500. The booster is like a rocket engine. We will be firing the rocket boosters one by one going forward. The 500 is mindful of the JPY 500 billion or JPY 50 billion this year. But when we look over the next 10 years, and if FX and the oil price remains at current level, then we are quite confident we will be able to do JPY 50 billion, particularly the paid-in capital reduction. As you know, bringing money from Australia to Japan, there are three ways of doing this. First is we can use this to pay down debt, which is secured through Singapore. That is using free cash flow. Other is the dividend payment or the capital reduction. Depending on the combination of this, the amount will change.
We may be able to lower dividend and lower the loan repayment and increase the paid-in capital reduction or vice versa. But it is dependent on how much free cash flow Ichthys are generated, what is the FX environment, what is the oil price, how much money is needed in Tokyo. We need to look at all these factors in making the decision. But all these combinations will be possible from a theoretical perspective, and we said that JPY 50 billion per year from the profit level. That is what we will keep in mind as we manage this. To extent, it is variable, but the upper limit is determined by oil price and the FX. If we stop the free cash flow from Ichthys, stopping them, we can transfer the money. These are determining factors in terms of their ceilings.
But we do have a level of freedom in regards to the combination. How much are we going to do this year or next year? We do have certain level of freedom in that regard. In regards to your second question, your thoughts in making decision about JPY 100 dividend. In the end, it was as a result of considering various factors. We have done those share buybacks and dividend so far, and some people really like our share buybacks, but the share buyback benefit is relatively limited in my view. We have quite a large number of individual shareholders, and the individual shareholders prefer stable dividend. We have promised a progressive dividend payment, so we need to. They are quite interested in seeing the dividend level increase going forward, and we want to expand the base of the filament shareholders in that regards.
Some people prefer a share buyback because they do not have to pay tax, but there are still a lot of people who prefer a dividend. When we take that into consideration, we had the option of going from JPY 90 to JPY 95. In regards to dividend, in order to communicate various messages, we decided to increase, just by JPY 10 to JPY 100. We are saying that we are going to pay the dividend in a progressive way. Over the medium-term period, we will not be able to lower the dividend level. If we think about the profit structure of the company, we felt that we are still able to accommodate this type of progressive dividend going forward. That was taken into consideration where we have prioritized the dividend somewhat.
Of course, we are going to do JPY 80 billion in those share buybacks, so we are going to do share buyback as well. From overall balance perspective, we have tried to communicate the message by increasing the dividend to JPY 100 on this occasion. Thank you very much.
It is progressive. Are you feeling the pressure that you cannot lower the dividend or the share buyback and dividend, the weighting, is it that you want to prefer more, you want to do the dividend more, preferably?
We had the dividend payout as being the basis of our return in the past, but dividend is difficult to lower. It is difficult to lower the dividend once you actually pay a certain level. We wanted to use the dividend as the fundamental approach and to use our share buyback in a supplementary way. We will continue to, I suppose, stick to this type of the returns policy. Thank you.
Major question. First, I would like to talk about my impression today. Ichthys is coming to one kind of milestone or goal, and since the listing, I have been covering your company, so it has been quite impressive. For Abadi, now we have this progress again, so I am also happy to hear this, well, analyst. You talked about the disclosure, and you want to make this really clear, and that is the stance we understand. After the midterm plan announcement in this short period of time, I think Abadi was the major reason. You have disclosed this information again, so we really appreciate that. ROE, you talked about your interest or focus on ROE as well. We really appreciate. First, regarding Ichthys going to FEED and doing equity finance before FID, and then after FID, we have the production start.
I was just remembering all this history. As mentioned before, we have the cost escalation, we have some delay, and these things happen. I would like to ask the management to work hard going forward. But one question is regarding Abadi, the amount of participating interest of Abadi. If you recollect Ichthys, you had to keep the majority, wanting to keep the majority, but still want to have other participants paying interest as well. You want to expand to Total and other companies. You had lowered your participating interest of Ichthys in the history. For Abadi, you talk about the 10% of the local participant, but outside of that, the thinking about the participating interest, can you share about that? If you can make comment like the old days of the Ichthys, I think that would be grateful.
Or if you are still in the consideration today, that is fine, but can you please give some comment around the participating interest for Abadi?
Regarding the interest, Abadi is currently, or until recently, our company and GeoPark was 50/50 split between the two until recently. Going forward, we will be spending a lot of money for the FEED and also FID. How we are going to change this participating interest is the major challenge, and we are still under negotiation today. It is hard to talk about details today, but after FID, we will get close to production. As a company, there is less risk. We like to take the risk for exploration.
Or the risk of explanation will go down, so we would like to take risk. From that 50, we think it will be largely increasing the interest or participating interest as number one. Number two, we have 65, and Pertamina, PETRONAS is 35. But based on the Indonesian law, 10% is going to be given to Indonesian participants. The local designated company by the government will be holding, and that is already decided. That 10% is ourself, Pertamina, PETRONAS. It will be pro rata based off sale of the interest. Just like Ichthys, the buyer or potential buyer, let us say there are some people who want to participate, like the case of Ichthys. From a few percentage of our request may come. In that case, we will also sell the participating interest of the upstream as a possibility.
With the JOGMEC and also with the Indonesian participants and the buyers. Thinking about all these people, we would like to decide on the end, at the end, how many percentage we will hold. But ultimately, we think half or so will be the end participating interest for this project. Okay, thank you very much.
Just one question. I wonder today, a follow-up explanation about the growth, the investment in the three-year forecast. This was increased from JPY 1.8 trillion to JPY 1.9 trillion. This fiscal year, when you look at the cash flow for growth investment, it has come down by about JPY 100 billion. The three-year, the investment growth, investment for growth has been increased, and there are, I suppose, an increase in project that meet your financial or the investment discipline. There is a bit of the time slippage. The percentage, or likelihood in regards to the investment growth, if you could give some commentary on that, please.
Please allow me to give some explanation, in that regard. When we announced the midterm management plan, it was between 8.9, and this was increased to JPY 1.9 trillion.
FX has been changed now from the JPY 135 to JPY 147. Even at the same investment amount, if you convert to Japanese yen, the amount will increase. That is one factor that was reflecting into the numbers. Also, as to whether there is a timing, the slippage, well, the investment for growth, that is something that we intended to do this year, and something that will slip to the next fiscal year. That is about JPY 100 billion in total. In total, we probably will do about JPY 600 billion of investment for growth per year. The acquiring new gas, the interest, this has been delayed somewhat, so that will slip to next year. But over the three years, we want to spend somewhere between JPY 1.8 billion to JPY 1.9 billion over the three-year midterm management plan.
This year is slightly lower, but that does include the timing, the slippage. Thank you.
Thank you very much. Now we are at the hour, so we would like to end today's meeting. If you have any further questions, please come to the IR Group, contact the IR Group going forward. Thank you so much for all your participation today. Thank you very much.