LNG

Chiyoda Corp., the Japanese LNG engineering company working on the Golden Pass project in Texas that has been hit by the bankruptcy of the US Zachry construction group, has had to take a hit on its earnings for the fiscal year just ended.

Chiyoda, based in Yokohama, Japan, said it was revising full-year consolidated financial forecasts and was publishing its earnings late.

Zachry Holdings, the lead contractor in the $10 billion project to transform the Golden Pass LNG terminal in Texas into an export plant, filed on May 8, 2024, for Chapter 11 bankruptcy protection.

Chiyoda said its earnings adjustments were because of the withdrawal of Zachry, one of the engineering partners, and amid efforts by Houston, Texas headquartered subsidiary, Chiyoda International Corp (CIC), to reorganise an operational structure with remaining partner, the McDermott unit CB&I LLC.

Earnings forecast

“Under the circumstances, the cost required to complete construction was forecast and recalculated with sufficient margin based on the currently effective contracts,” Chiyoda explained.

“Consequently, sales and operating income are expected to decrease from the previous forecast,” said Chiyoda.

Ordinary income is expected to drop to 5.5 billion Japanese yen ($34.5 million) from 28Bln yen ($175.37M) in the previous forecast.

This is down from the 20.32Bln 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,” said Chiyoda.

Chiyoda stated that it would strive to successfully negotiate a contract with GPX and restore its equity capital by counting the contract money in its financial results to re-estimate reserves for losses on construction contracts in or after the fiscal term of the second quarter of the fiscal year 2024.

Chiyoda's secure finances

“Chiyoda’s cash and cash equivalents on its consolidated financial statements after the end of March 2024 up to the present day is about 100 billion yen ($627M) and there is no risk of harm to its business operations,” the company declared.

The Golden Pass liquefaction facilities are being constructed at the existing terminal located on the Sabine-Neches Waterway in Texas.

Three liquefaction Trains are planned with a combined nameplate capacity of around 16 million tonnes per annum of LNG.

ExxonMobil and QatarEnergy own 30 percent and 70 percent respectively of the venture.

The Train 1 mechanical completion had been scheduled for the end of 2024 and with first LNG in the first half of 2025.

ExxonMobil Corp., the US major and significant participant in the liquefied natural gas business, said oil, pipeline natural gas and LNG would still make up more than half of the world’s energy supply through 2050 because the usefulness of oil and gas in meeting the world’s needs remained unmatched.

Chiyoda Corp, the leading Japanese energy and LNG engineering company involved in projects worldwide, has announced that it will merge three group companies as part of a corporate overhaul and a re-organization of executives.

The company will merge Chiyoda Kosho Co., Chiyoda System Technologies and Chiyoda TechnoAce Co., to establish a company called Chiyoda X-ONE Engineering Corp.

Chiyoda is currently working on LNG engineering, procurement and construction projects in Qatar, the US and Nigeria.

The company is also executing the EPC phase of the North Field East LNG project, which is the expansion of four LNG Trains with capacity of 8 million metric tonnes per annum.

In the US, the main EPC focus of the company is the Golden Pass LNG project being developed by QatarEnergy and ExxonMobil.

Core business

The new “Chiyoda X-ONE Engineering Corp.” will be based at its Koyasu Office and Research Park in Yokohama as of 1 April 2023.

Chiyoda said that the name of the new company includes “Engineering” as its core business and “X-ONE” in reference to the combination of Transformation (X) by “One Team” .

Following the merger, Chiyoda Kosho Co. will operate as the company's “Energy, Environment & Maintenance Business Division”, Chiyoda System Technologies Corp. will function as its “Instrumentation & Electrical Solutions Business Division” and Chiyoda TechnoAce Co. Ltd will operate as its “Life Science Business Division”.

“The company is committed to optimizing the technological capabilities, experience and track record accumulated by the three organizations to progress as a sustainable leading integrated engineering contractor,’ said Chiyoda.

Chiyoda X-ONE Engineering Corp. will be under President Taku Ito, while a Chief Executive will be appointed to the new entity.

“Prior to the merger, Chiyoda will reorganize its plant operation and maintenance solution and digital transformation business organizational functions to launch a new ‘O&M Transformation Solution Business Department’ as of 1 January 2023,’ explained Chiyoda.

“Chiyoda will collaborate with the company, other Group companies and business partners in implementing its growth strategy in the new business portfolio innovations of life science, next-generation power systems, carbon neutrality and plant operation and maintenance solutions, as well as traditional energy sectors,” stated Chiyoda.

“While continuing to contribute to resolving society’s challenges, Chiyoda is proactively responding to changes in the business environment and aiming to strengthen as a consolidated group,” it added.

The first liquefaction Train at the US Golden Pass LNG export project being constructed in Texas for a joint venture between Qatar Petroleum and ExxonMobil is still on schedule to come on stream by 2024.

ExxonMobil Corp. has proposed a huge public-private carbon storage project at the centre of the Gulf Coast LNG industry that would collect carbon-dioxide emissions from petrochemical plants and refineries in the area and bury them under the Gulf of Mexico.

Qatar Petroleum has signed the largest LNG shipbuilding agreements in history to secure more than 100 ships valued at around $20 billion to transport planned additional production volumes from the Arab Gulf North Field expansion.

Qatar Petroleum is finalizing plans to reserve berths for orders of at least 60 LNG carriers from Asian shipyards to give the sector a boost as nations emerge over the next two months from the economic disruptions of the coronavirus.