Japan’s INPEX Corp. is delaying start-up production at the Ichthys LNG project, offshore Western Australia to 3Q 2017, which is expected to increase investments by up to 10%.
Ichthys development plan. From INPEX.
The Ichthys field is located about 220km offshore Western Australia and 820km southwest of Darwin. The project comprises liquefying natural gas lifted from the Ichthys gas-condensate field offshore Western Australia at an onshore gas liquefaction plant constructed in Darwin, Northern Territory, and producing and shipping 8.9 million tons of LNG and 1.6 million tons of LPG per year, along with approximately 100,000 b/d of condensate at peak.
Production at the project was originally scheduled to begin toward the end of December 2016. INPEX also announced it is raising annual LNG production capacity by approximately 6% to 8.9 MTPA from the initially planned 8.4 MTPA.
According to INPEX, Ichthys was approximately 74% complete as of June 2015. However, the production start schedule is being based on the findings of a detailed review of the project’s development schedule. The company will continue to diligently proceed with development work while prioritizing safety.
INPEX is expecting the delay to affect the project’s investment, with an increase of about 10%, which could bring the total cost to approximately US$37.4 billion. The original estimated cost was $34 billion.
“All the LNG initially planned to be produced from the project has been sold. Of this, about 70% of the LNG is set to be supplied to Japan, and this is expected to further contribute to the long-term, stable supply of energy to the country and improve Japan’s energy procurement risk management,” said INPEX president and CEO Toshiaki Kitamura.
The impact of the production start schedule update, if any, on the consolidated financial results for the year ending 31 March 2016 is expected to be minimal. The company plans to cover the costs of the project through its own funds as well as external loans (project financing, etc.) as originally scheduled, INPEX said.
In May, the first of 49 foundation piles were deployed and driven into the seabed at Ichthys as part of an ongoing installation campaign.
The Ichthys LNG project is a large-scale LNG project by global standards, and is expected to be operational over a period of 40 years. In 1998, INPEX acquired an exploration permit in the block where the project is located, and following development studies including exploration, evaluation and FEED work, the company announced its final investment decision (FID) in January 2012.
INPEX is the operator of the Ichthys LNG project with 62.245% interest. Partners include Total (30%), CPC Corp. Taiwan (2.625%), Tokyo Gas (1.575%), Osaka Gas (1.2%), Kansai Electric (1.2%), Chubu Electric Power(0.735%) and Toho Gas (0.42%).
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