Australia's Ichthys LNG Dealt Blow As Major Contractor Pulls Plug
SINGAPORE, Jan 25 (Reuters) - Australia's over $35 billion Ichthys liquefied natural gas (LNG) export project has been dealt a blow as engineering firm CIMIC, involved in building the facility's power station, announced on Wednesday it was pulling the plug.
"CIMIC Group advises that the ... consortium (building the power station) ... has terminated its contract with JKC Australia LNG Pty Ltd for the design, construction and commissioning of the Ichthys Combined Cycle Power Plant (CCPP) project," CIMIC said in a statement to the Australian Securities Exchange Ltd (ASX) on Wednesday.
CIMIC spokeswoman Fiona Tyndall said "we are not going beyond what we have said in that ASX statement."
The power station is designed to supply the Ichthys LNG export facility with electricity.
A spokesman for Japan's Inpex, the majority owner of Ichthys LNG, said the power station was 89 percent complete.
And while the spokesman said Inpex did not see this cancellation as "critical" to Ichthys and that it would have "no fatal influence" on its launch, the cancellation will almost certainly delay the project's production ramp-up and add further costs, which was scheduled for July to September this year.
Australia's $200 billion LNG production ramp-up is one of the biggest increases in supply the industry has ever seen, and will lift Australia over Qatar as the world's biggest LNG exporter.
Even so, most of Australia's LNG projects currently under construction, including Chevron's huge Gorgon facility and Royal Dutch Shell's floating Prelude production vessel, are having trouble keeping within budget and sticking to schedules, and more delays are expected.
"All projects currently being built or expanded in Australia are having trouble with time and cost control. They will almost certainly see further delays," a source advising LNG producers said on condition of anonymity.
Once completed, Ichthys will produce 8.4 million tonnes of LNG per year.
Inpex holds 72.8 percent of the project, France's Total 24 percent, with the rest spread over Japanese utilities Tokyo Gas, Osaka Gas, and Toho Gas.
CIMIC gained the power station and infrastructure contracts for Ichthys after taking over Australian engineering firm UGL last year.
UGL said in its last annual report that "unfortunately, the projects continued to be impacted by significant client delays and disruption resulting in additional costs incurred."
CIMIC said the termination of the contract will not have any "material impact" on its 2016 and 2017 financial results.
(Reporting by Henning Gloystein; Additional reporting by Osamu Tsukimori in TOKYO and Tom Westbrook in SYDNEY; Editing by Tom Hogue and Christian Schmollinger)
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Weatherford CEO's Rebound Plan Relies On Getting Smaller
- Iran Says Oil Market Is Too Tight For US Zero Exports Target
- China's Squeezed 'Teapots' Eye Petchem Path To Riches
- Baker Hughes: US Drillers Add Oil Rigs For Second Week In Three
- Venezuela Hands China More Oil Presence, But No Mention Of New Funds
- Blockchain Demands Attention in Oil and Gas
- Macquarie Sees USA Oil Production Exiting 2024 at 14MM Barrels Per Day
- CNPC Opens Sea-Land Oil Storage and Transport Facility in Bangladesh
- Oman Sees Increasing Ship-to-Ship Transfers of Russian Oil Bound for India
- US Govt Makes Record Investment of $6B for Industrial Decarbonization
- Perenco Still Searching for Missing Person After Platform Incident
- Eni, Fincantieri, RINA Ink Deal on Maritime Decarbonization
- Oil Falls as US Inventories Increase
- Czech Utility CEZ Bucks Weaker Prices, Demand to Log Record Annual Profit
- Ithaca Energy Studies Deal for Eni's UK Upstream Assets
- Equinor Makes Discovery in North Sea
- Standard Chartered Reiterates $94 Brent Call
- India Halts Russia Oil Supplies From Sanctioned Tanker Giant
- DOI Announces Proposal for Second GOM Offshore Wind Auction
- Centcom, Dryad Outline Recent Moves Around Red Sea Region
- PetroChina Set to Receive Venezuelan Oil
- Czech Conglomerate to Buy Major Stake in Gasnet for $917MM
- US DOE Offers $44MM in Funding to Boost Clean Power Distribution
- Oil Settles Lower as Stronger Dollar Offsets Tighter Market
- UK Grid Operator Receives Aid to Advance Rural Decarbonization
- Chinese Mega Company Makes Major Oilfield Discovery
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Another Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Vessel Sinks in Red Sea After Missile Strike
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension
- Equinor Makes Discovery in North Sea
- Standard Chartered Reiterates $94 Brent Call