Chiyoda, the Japanese LNG engineering firm working on the Golden Pass LNG project, has been hit by the bankruptcy of the US Zachry construction group. The Yokohama-based company said it was revising full-year consolidated financial forecasts and was publishing its earnings late.
Golden Pass LNG is being developed by ExxonMobil and QatarEnergy on the Sabine-Neches Waterway in Texas. Three liquefaction Trains are planned with 16 mtpa combined nameplate capacity. Train 1 mechanical completion had been scheduled for the end of 2024, aiming for first LNG in the first half of 2025.
Bankruptcy and withdrawal of Zachry, one of the engineering partners the Golden Pass venture, had forced Chiyoda to reorganise an operational structure with remaining partner, the McDermott unit CB&I. “Under the circumstances, the cost required to complete construction was forecast and recalculated with sufficient margin based on the currently effective contracts,” Chiyoda said, adding: “Consequently, sales and operating income are expected to decrease from the previous forecast.”
Ordinary income is expected to drop to 5.5 billion Japanese yen ($34.5 million) from 28 billion yen ($175.37m) in the previous forecast. This is down from the 20.32 billion yen ($127.2m) logged in the previous 2022-2023 fiscal year.
“Short-term and long-term plans to complete construction will be agreed among the three parties Chiyoda, CBI and the Golden Pass (GPX) project soon after Zachry’s official and formal withdrawal from the project,” Chiyoda explained. Stakes are high for Chiyoda to negotiate a contract with GPX and count the contract money in its financial results in order to re-estimate reserves for losses on construction contracts in the second quarter.
