LNG

Inpex Corp., the Japanese oil and gas developer and operator of the Australian Ichthys LNG export plant near Darwin, has counter-sued South Korea's Samsung Heavy Industries over a payment dispute related to the delivery of the Central Processing Facility (CPF) for the Ichthys gas field offshore northwest Australia.

SHI confirmed that the law suit had been filed by Inpex after the South Korean company had sought arbitration in April 2021 over the unpaid full CPF contract settlement.

The commissioning at the CPF was completed at the end of May 2018 and that was the last major task to be carried out by the developers in the offshore section.

However, Inpex claimed at the time that late deliveries of the CPF and other offshore equipment were among several factors that caused the delayed commercial start of the Ichthys venture for Inpex and French major Total, now called TotalEnergies.

The Ichthys feed-gas is sent to Bladin Point in the Northern Territory through a 890 kilometres-long gas pipeline.

SHI said in its claim that after the installation of the CPF it asked the Japanese company to settle the balance of the contract amounting to $116M.

But Inpex refused, saying the delayed CPF arrival and installation had caused project hold-ups.

SHI finally lodged a complaint against Inpex on April 30, 2021, with the Singapore International Arbitration Centre, seeking payment for the rest of the contract amount.

This latest Inpex lawsuit is separate from another involving the joint venture Ichthys LNG engineering consortium JKC, consisting of KBR, Chiyoda and JGC Corp.

The Ichthys project's final cost was estimated at more than US$40 billion.

This far exceeded a 2012 cost estimate of US$34Bln for the venture, which was beset by delays of almost two years.

The first shipment of LNG from liquefaction plant was finally delivered on the 30th October 2018 to the Inpex-operated Naoetsu LNG Terminal in Niigata Prefecture.

A total of 8.4 MTPA of LNG out of the almost 9 MTPA from the two-Train plant was pre-sold to Japanese utility companies Tokyo Gas, Osaka Gas, Kansai Electric Power, Jera Co. Inc. and Toho Gas. CPC Corp. of Taiwan also receives shipments.

Inpex Corp., the largest Japanese exploration and production company and an Australian LNG plant operator, said it concluded a loan refinancing agreement for a portion of the loans taken out to develop the Ichthys facility near Darwin.

The company said the refinancing arrangements covered project finance loans arranged in 2012 with export credit agencies (ECAs) and commercial banks.

Total project finance loans for the Ichthys project amounted to approximately US$15.6 billion, of which the new refinanced amount covered in the latest agreement is US$8.3Bln.

The agreement involves seven ECAs and 28 commercial banks.

Inpex said the agreement includes loan conversions and improved borrowing conditions.

“The loan refinancing agreement is the result of a refinancing bid formally issued by Inpex in March 2020 with the objective of improving borrowing conditions, based on the Project achieving financial completion in December 2019 and continuing to sustain stable production operations,” explained the Japanese company.

Inpex is operator of the Ichthys plant at Bladin Point near Darwin and is also developing the Abadi LNG project in Indonesia with Royal Dutch Shell.

The plant came on stream in 2018 and produces almost 9 million tonnes per annum of LNG from two processing Trains.

Shares in Ichthys LNG held by Inpex amount to around 66 percent of equity, while French major Total has 26 percent.

Micro-stakes are held by CPC Corp. of Taiwan and Japan’s main utilities and LNG buyers, JERA Co. Inc., Tokyo Gas, Osaka Gas, Kansai Electric and Toho Gas.

“The project’s smooth progress despite the impact of the decline in oil prices caused by the spread of Covid-19 and other factors was evaluated favorably,” stated Inpex.

“Accordingly, Inpex received commitments from financial institutions exceeding the amount expressed in the refinancing bid,” it added.

Inpex said it believed that the refinancing agreement would enhance the value of the Ichthys project by reducing the financial commitments.

“Furthermore, the agreement is part of INPEX’s cost reduction initiatives under the company’s basic policy in response to the decline in oil prices and is expected to contribute to improving the resilience of the Inpex Group’s business structure,” it explained.

“Inpex will continue to lead efforts to sustain stable operations at the project with the understanding and cooperation of all its stakeholders,” said the company.

“These include the project’s joint venture participants, the local communities, the Australian federal government and the governments of the Northern Territory and Western Australia,” it stated.