Gas Processing is Produced by Gulf Publishing Company

Your source for technology information for the gas processing industry


Inpex's Ichthys LNG hit by another contract dispute

SYDNEY/TOKYO (Reuters) -- Inpex's $37 billion Ichthys Australian liquefied natural gas project was hit by another subcontractor dispute, involving the termination of more than 600 workers, but the Japanese company said it was still on schedule for a July-September start.

Inpex Ichthys Small
Photo Courtesy of Inpex.

Members of a consortium building LNG storage tanks at the onshore site of Ichthys near Darwin are in dispute with each other and have stopped work, with one of them abruptly letting go 640 workers, said JKC Australia LNG, which is handling overall construction of the project, on Wednesday.

Inpex said the tanks were 91% complete and the project remained on schedule to start shipping LNG to customers in the third quarter.

Still, the disagreement is the latest potential delay in Australia's $200 billion LNG ramp-up, one of the biggest supply increases ever in the gas industry and which will lift Australia over Qatar as top global exporter of the fuel.

The Ichthys dispute is not good news for the project's timely completion, said Saul Kavonic, a Perth-based analyst for global resource consultancy Wood Mackenzie.

"Inpex is targeting a very aggressive construction completion ... to get a first cargo out by the end of September, given the central processing facility, the largest in the world, is still in a Korean ship yard," Kavonic said.

Inpex is not directly involved in the disagreement because it's a matter between subcontractors, so it is not in a position to comment, the Japanese company said.

The disagreement between consortium members Kawasaki Heavy Industries and Laing O'Rourke PLC involves a payment dispute, with JKC saying the latter has released about 245 local hires and 395 other workers that fly in and out.

Ichthys was hit by an earlier contractual dispute in January when an engineering company building a power plant for Ichthys pulled out of the project.

The Australian Manufacturing Workers' Union in a statement said the lay-offs were "due to an ongoing contractual dispute on the project regarding payments."

Kawasaki Heavy has not paid its partner for work on the project for several months, Laing O'Rourke said in a statement.

Kawasaki Heavy could not immediately comment.

Most of the LNG plants being built in Australia, including Chevron's huge Gorgon facility and Royal Dutch Shell's floating Prelude production vessel, are having trouble keeping within budget and on schedule. More delays are expected.

Once completed, Ichthys will produce 8.9 MMt of LNG per year.

Inpex holds 62.245% of Ichthys and France's Total 30%. The rest is spread amongst Taiwan's CPC Corp and Japanese utilities Tokyo Gas, Osaka Gas, Kansai Electric, JERA Corp and Toho Gas.

Reporting by Sonali Paul in SYDNEY and Osamu Tsukimori in TOKYO; Writing by Aaron Sheldrick; Editing by Tom Hogue


Copyright © 2018. All market data is provided by Barchart Solutions. Futures: at least a 10 minute delay. Information is provided 'as is' and solely for informational purposes, not for trading purposes or advice. To see all exchange delays and terms of use, please see disclaimer.

                                  CMEGroup                                     Icelogo

FEATURED COLUMNS

Editorial Comment
-Adrienne Blume
At CERAWeek by IHS Markit, held in Houston in March, IEA Director Fatih Birol said that the world would soon see a major second wave of shale gas production from the US in response to higher energy prices and growing demand from India and China.
Regional Focus
-Shem Oirere
Mozambique and Tanzania hold an estimated 180 Tft3 and 57 Tft3 of proven natural gas reserves, respectively.


Maximize Profitability with Advanced Analytics at Natural Gas Processing Plants

Register Now

Incorporating economic data into process modeling is key to optimizing operations and maximizing profits at gas processing plants. However, maintaining optimal operations are often challenging due to changing market dynamics, contract structures and increasing process flexibility. Today, gas processors are leveraging Predictive Control and First Principles models to accurately determine and control the optimal operating targets in real time based on the most current plant conditions and profitability, optimizing recovery of natural gas liquids. Learn how real-time analytics, combined with decision support tools, empower companies to:
•Improve processing margins by up to 5%
•Maximize NGL production through improved availability and optimized process conditions
•Improve compositional control to operate closer to product specifications

May 22, 2018 10am CDT

Register Now

 

Please read our Term and Conditions, Cookies Policy, and Privacy Policy before using the site. All material subject to strictly enforced copyright laws.
© 2018 Gulf Publishing Company.