LNG

Chiyoda and McDermott have signed a revised EPC contract for the Trains 2 & 3 of the $10 billion Golden Pass LNG project, concluding months of negotiations over future cost sharing and project responsibilities. Train 1 is in advanced commissioning, while Trains 2 and 3 are now expected to start up between late 2026 and 2027.

ExxonMobil indicated the timeline of getting Golden Pass LNG project into full operation could slip into 2026, though commissioning works are already underway.

May 7 (LNGJ) - Chiyoda Corp, the leading Japanese energy and LNG engineering company involved in projects worldwide, reported sales of 315.39 billion yen ($2.88Bln) in the fiscal year to the end of March 2021, a fall of 18.3 percent on the previous year. However, Chiyoda pointed out that it expected improvements in the coming year as it executed LNG engineering, procurement and construction projects in Qatar, the US and Nigeria.

   “In Qatar, Chiyoda has won the order for the EPC phase of the North Field East LNG project, which is the expansion of four LNG Trains with capacity of 8 million metric tons per annum,” said the company. “In the US, the Golden Pass LNG project is in the EPC phase and in the Nigeria LNG project Chiyoda is providing review and other technical support to our partner, which is performing the engineering,” it added. “In Japan, EPC phase work is currently underway to reinforce, modify, and repair existing LNG terminals that were built by Chiyoda, and to newly install and add earthquake and tsunami reinforcement to gas supply facilities for thermal power plants,” stated the company.

McDermott International of the US and Chiyoda Corp. of Japan said they had reached the final commissioning stage at the Sempra Energy-operated Train two at the Cameron LNG export project in Louisiana.

McDermott International Inc., one of the main firms involved in the US Gulf Coast build-out of liquefaction and export plants, was the subject of speculation at the Gastech 2019 conference in Houston after its shares plunged more than 60 percent and trading was suspended.

Chiyoda Corp., one of the leading Japanese LNG engineering companies, has named Kazushi Okawa as its new Chairman and Chief Executive to lead turnaround efforts after it suffered large losses on contracts and a plunge in its shares.

Mitsubishi Corp. of Japan is planning to refinance the Japanese energy and LNG engineering company Chiyoda Corp. with a capital injection of at least $1.4 billion to help it recover from project setbacks and to secure some of the liquefaction plant work in a new wave of forthcoming contracts.

Qatar has said that qualified shipyards in South Korea were being invited to participate in a tender for the provision of newbuild slots for dozens of LNG carriers required for the expansion of the Gulf nation’s North Field resources and the building of up to four new processing Trains.

JGC Corp. of Japan, one of the leading global energy engineering companies, has posted lower sales and income in the third quarter of its fiscal year as it prepared to take on the LNG Canada liquefaction and export project in British Columbia.

Chiyoda Corp., the Japanese engineering company with seven large-scale recent, current and future liquefaction contracts, has posted operational losses related to several LNG projects, including the Cameron LNG export plant in Louisiana being constructed in a joint venture with US firm McDermott International.

McDermott issued a statement after Chiyoda outlined losses on Cameron LNG and the Tangguh project in Indonesia.

McDermott said it would also be taking a hit on the Cameron engineering contract joint venture.

“Losses are mainly due to an increase in incremental construction costs for the Cameron LNG project,” said Chiyoda in its fiscal third-quarter earnings report.

In the financial results, Chiyoda posted an operating loss in the third fiscal quarter of 107.79 billion yen ($972 million), due to “significantly increased construction costs for ongoing LNG projects” and cited the Cameron LNG project of Sempra Energy and the Tangguh LNG expansion in Indonesia being built for operator BP of the UK.

Chiyoda, McDermott and the US Zachry Group have additionally just been awarded an engineering, procurement and construction contract for the Golden Pass  export plant in Texas by Qatar Petroleum and ExxonMobil. 

“The company expects a deterioration of cash flow and new financing may be required early in the next fiscal year,” stated Chiyoda.

“Under this circumstance, the company recognizes that events and conditions may cause substantial doubts about its ability to continue as a going concern,” stated Chiyoda.

“In addition, Chiyoda is implementing countermeasures to reduce costs, obtaining change orders, reviewing settlement conditions from ongoing projects including the Cameron LNG project, as well as making efforts to improve its cash flow,” said the Japanese company.

One of Chiyoda’s main shareholders is the trading house, Mitsubishi Corp.

Chiyoda has also been involved in several other LNG projects, including Ichthys LNG in Australia for Inpex Corp. and its partners and the Yamal LNG venture in Russia for Novatek, Total and Chinese stakeholders.

“Furthermore the company has been actively involved in front-end engineering and design work (FEED) for the Qatar expansion project, and FEED and engineering, procurement and construction (EPC) proposal preparation work for Nigeria LNG Train 7,” explained Chiyoda.

Chiyoda’s partner in Cameron LNG, McDermott, said it would be posting a fourth-quarter charge estimated at around $168M.

“The charge is due to unfavorable labor productivity, and increases in subcontract, commissioning and construction management costs,” said the US company.

McDermott noted that the Cameron LNG project, currently under construction in Hackberry, in Louisiana, was a world-scale facility incorporating proven technology and designed to produce nearly 14 million tonnes per annum of LNG.

“Operationally, the project is on track to reach a major milestone with feed-gas being introduced into the facility later this quarter,” said McDermott.

“Construction continues to progress well. The gas turbine solo run was completed ahead of schedule, cold circulation of hot oil in Train 1 was completed during the quarter and flare ignition testing was successfully completed on all flares,” added the US company.

“All of these are crucial steps in the commissioning of Train 1,” stated McDermott in its Cameron project update.

McDermott said it expected to report its fourth-quarter results on February 25 with the charge included.