Inpex’s $37bn Ichthys LNG hit by dispute

Sarah Carter
Sarah Carter

16 March 2017


Inpex's $37 billion Ichthys Australian liquefied natural gas project was hit by another subcontractor dispute, involving the termination of more than 800 workers, says a report in FT. A series of contractual disputes in the LNG project near Darwin are threatening further delays and cost overruns to Japan’s largest single investment in Australia, the report said. The head contractor JKC Australia LNG confirmed 640 direct employees had been stood down from the project and Laing O'Rourke said a further 200 subcontractors were also affected. Laing O'Rourke has the contract to build cryogenic tanks at the Inpex site on behalf of Kawasaki Heavy Industries (KHI), one of the largest contracts on the project. The tanks were part of the contract at the site, but O'Rourke has reportedly withdrawn from the project amid the contractual dispute. KHI, which leads this phase, has not paid Laing O’Rourke for its work on this remote engineering project for several months, according to a Laing O’Rourke statement. The 8.4 million tonnes a year Ichthys LNG project is Japan's largest overseas investment. The startup date for production has already been pushed back from late 2016, with many expecting first gas will not flow until early 2018. According to local media and Reuters reports, 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. Malcolm Turnbull, Australia’s prime minister, extracted promises of greater domestic production and warned the government would intervene to safeguard supplies. Image: Stock.