13/01/2012 - 06:50

Ichthys LNG project to cost US$34bn

13/01/2012 - 06:50

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Ichthys LNG project to cost US$34bn

The owners of the Ichthys LNG project have today announced that the cost of the development will be US$34 billion, above most recent estimates for the long awaited project.

Inpex chairman Naoki Kuroda and Total senior vice president Asia Pacific Jean-Marie Guillermou announced the final investment decision at a press conference in Darwin today.

“The Ichthys FID announced today by INPEX and Total signals the start of construction of one of the world’s largest LNG facilities based on an estimated 40 years of gas and condensate reserves from the Browse Basin offshore Western Australia,” Mr Kuroda said in a statement.

“In delivering this important Project into production we will be securing vital long-term energy supply to Japan and our other customers while delivering sustainable economic and social benefits across Australia.”

Mr Kuroda said the Ichthys LNG Project was the cornerstone in the company’s growth strategy into the 21st Century and would be the first time INPEX was leading such a worldscale project as operator.

“Ichthys production volumes represent more than 10% of Japan’s LNG imports at current levels,” Mr Kuroda said. “Ichthys will provide a long-term stable supply of cleaner energy to Japan, and help Japan diversify its energy sources.

The project will develop the Ichthys gas fields, in the Browse Basin off WA’s Kimberley coast.

The gas will be piped 890 kilometres to Darwin for processing in a new LNG plant, to be built near ConocoPhillips existing Darwin LNG plant.

Inpex had originally planned to build its LNG plant on an island just off the Kimberley coast, but was unable to secure approvals within its preferred time frame.

Mr Kuroda said mobilisation for construction of the project would start immediately with preliminary works at the Blaydin Point site due to commence within weeks.

Mr Kuroda confirmed that Engineering, Procurement and Construction (EPC) of the onshore LNG plant and associated infrastructure would be undertaken by the JKC joint venture, comprising JGC Corporation, KBR and Chiyoda Corporation.

Mr Kuroda also confirmed contracts to be awarded for the major offshore work packages, including:

•Central processing facility – Samsung Heavy Industry

•Subsea production system – General Electric

•Subsea flow line construction and installation – McDermott International in cooperation with Heerema

•Gas export pipeline – Mitsui-Europipe, Sumitomo, Nippon Steel-Metal One (pipe manufacture); Mitsui-Bredero Shaw (pipe concrete coating); Saipem (pipelay)

•Floating production storage and offloading vessel – to be announced in the coming weeks.

Mr Kuroda said all successful tenderers to the Ichthys LNG Project in Australia had to demonstrate how they will maximise the use of Australian products and services.

“Ongoing compliance and reporting mechanisms will ensure contractors perform to the standards set by the Ichthys Project’s approved Australian Industry Participation plans and contractual obligations,” Mr Kuroda said.

“Ichthys will truly be an international collaboration. An estimated 3000 jobs will be needed in Darwin during the peak of construction with a further 1000 offshore. Once the Project is in operation we will require approximately 700 permanent positions.”

 

Ichthys adds to a surge in LNG investment in northern Australia.

Projects underway in WA include Woodside’s Pluto development, to be commissioned this year, and Chevron’s Gorgon and Wheatstone developments, which collectively will cost about $85 billion.

In addition, Shell is building a new-style floating LNG facility to tap the Sunrise gas field, located adjacent to the Ichthys field.

The WA investment is set to be matched by at least four LNG projects in Queensland, which are tapping onshore coal seam gas fields.

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