Australia's UGL Faces More Provisions On Work For Ichthys LNG
MELBOURNE, June 6 (Reuters) - Australian contractor UGL Ltd warned on Monday it may have to book a provision of up to A$200 million ($146 million) for losses on its work for the Ichthys liquefied natural gas (LNG) project, knocking its shares down 35 percent.
Ichthys, off northwestern Australia, is running at least six months behind its original schedule due and is now not expected to start producing until September 2017 due to changes in the scope of the project, mainly owned by Japan's Inpex Corp and France's Total SA.
That has led to cost blowouts for the UGL-Kentz joint venture handling construction of onshore facilities and claims against the project's main contractor, the JKC joint venture formed by JGC Corp, KBR and Chiyoda Corp .
UGL said on Monday it had not yet settled those claims, even though it said UGL and its partner Kentz had accommodated their client's delays to the project. UGL threatened to pursue a formal dispute process if necessary.
"This is very disappointing given the co-operation of the JV to ensure client delays to the project were, and continue to be, accommodated," UGL Chief Executive Ross Taylor said in a statement.
The company said if talks failed and it did have to resort to a formal dispute process, it may have to book contract loss provisions of up to A$200 million, all or part of which may be recoverable from JKC.
That would be on top of a A$175 million provision it has already booked for delays on a power plant for the project.
UGL's shares sank as much as 35 percent to A$2.24, their lowest since February and on track for their biggest one day loss ever. ($1 = 1.3657 Australian dollars)
(Reporting by Sonali Paul; Editing by Ed Davies)
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