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Inpex sticks to Ichthys start-up date despite power project blow

27th January 2017

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – Energy major Inpex has brushed off concerns about delays at its 8.9-million-tonne-a-year Ichthys liquefied natural gas (LNG) project, after project house UGL terminated its construction and commissioning contract of the combined cycle power plant (CCPP), in Darwin.

The termination of the contract is the result of a spat between UGL, which was recently bought by Cimic, and main contractor JKC Australia, reportedly over project delays and cost blow-outs. The cancellation of the contract resulted in 300 people losing their jobs.

“This is a matter between JKC and its subcontractors,” Inpex said in a statement to Mining Weekly Online.

“The Ichthys LNG project is 90% complete as at September 2016. Outstanding works to complete the remaining CCPP scopes are not on the critical path for the start of production. Our target remains to start production in the third quarter of 2017,” the company said.

JKC for its part said that it was disappointed that UGL had taken this action, saying that construction of the CCPP had been temporarily halted.

“The CCPP is approximately 89% complete, and JKC remains committed to delivering its scope of work and the overall Ichthys project onshore LNG facilities,” the contractor said.

Commercial analyst Wood Mackenzie (Woodmac) this week foreshadowed delays in the start-ups of some major LNG projects scheduled for completion in 2017, including Ichthys, the Gorgon Train 3, Wheatsone and Prelude LNG projects.

Woodmac said in a memo that it was inevitable that some of the major LNG projects would suffer further schedule slippages.

“In the Carnarvon basin, both Chevron's $60-billion Gorgon and $36-billion Wheatstone projects have suffered cost and schedule overruns. In the Browse basin, Inpex's $40-billion Ichthys project and Shell's pioneering $14-billion Prelude floating LNG project have also suffered setbacks.”

The analyst noted that construction challenges, competition for resources between the Ichthys and Prelude projects, and financial challenges facing the yard contractor, have contributed to delays in these projects.

“Both projects' operators aim to move the facilities from the yards in 2017 before cyclone season begins around the fourth quarter. However, both facilities are likely to face a lengthy commissioning process, which could push first LNG cargoes into 2018. Any carryover work left to be done after leaving the yards will result in additional costs and delays,” Woodmac said.

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online

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