Inpex In Nearly $1Bn Dispute With DSME Over Ichthys FPSO
Japanese oil and gas company Inpex has filed a $972 million claim against Daewoo Shipbuilding & Marine Engineering (DSME) regarding the construction of the FPSO for the Ichthys field off Australia.
DSME said that Inpex’s $972 million claim was filed to the International Chamber of Commerce and amounts to over 57 percent of the shipyard’s equity capital. The claim is related to the alleged delay in the incomplete construction of an FPSO and it is an application for arbitration.
The shipbuilder is preparing a response to Inpex’s claim and arbitration request and it plans to respond according to the arbitration process in the future.
It is worth noting that DSME received an order from Inpex for the delivery of an FPSO in 2012. The vessel – Ichthys Venturer – completed the departure from Okpo Shipyard, heading towards its ultimate destination in the Browse Basin off Western Australia in the summer of 2017. It was moored a little over 2 miles away from the second part of the project – the Ichthys Explorer central processing facility. First gas from Ichthys started in late July 2018.
DSME stated that the FPSO was ready for commissioning to start production off the Australian coast by 2019 and the commissioning was completed. With a storage capacity of 1.12 million barrels of condensate, the vessel has an expectancy for a continuous operating life of 40 years.
On the other hand, Inpex filed a claim for damages from the shipyard, citing delays and defects in the commissioning preparation work. DSME believes that the amount of compensation and the grounds claimed by Inpex were ‘unreasonable.’
According to DSME, it will minimize the financial impact of Inpex’s arbitration and will actively respond to the arbitration procedure to recover the balance under the contract.
"At this moment, it is stably producing liquefied natural gas, liquefied petroleum gas, and condensate for exports," DSME said. The shipbuilder also highlighted that Inpex is now litigating issues that the shipyard believes were part of previously agreed contract changes.
Last year, Inpex settled out of court for similar claims made against Samsung Heavy Industries. The two companies had sued each other over claims from the construction of the Ichthys Explorer built by Samsung for the same project in Australia.
The suit comes as DSME is working on an emergency management situation due to its declining financial position. The company had to cancel deals with Sovcomflot after sanctions were introduced against Russia after the start of the invasion of Ukraine. The shipyard also experienced a nearly 2-month strike by subcontractors.
There are also rumors that the holder of most of DSME’s debt, Korea Development Bank, would seek to split the yard into its commercial shipping and military operations and sell the commercial shipping business. At the moment, DSME is denying this, and the Korea Development Bank is reportedly seeking to privatize the shipyard in another way as the sale to Hyundai was blocked after opposition from the European Union.
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