LNG

JGC Corp said a lawsuit has been filed against it and engineering partners, Chiyoda Corp. and KBR of the US, in the Yokohama District Court by the Ichthys LNG project in Australia, led by Japan’s Inpex Corp., claiming around A$758 million (US$595M) in a long-running dispute.

JGC had formed a joint venture company with Chiyoda and KBR, called JKC Australia, and was awarded a project for the engineering, procurement and construction (EPC) services of the onshore LNG plant at Bladin Point near Darwin in the Northern Territory in 2012 by Ichthys LNG, led by Inpex.

“All plant facilities were completed and delivered,” explained JGC.

“However, in the course of the execution of the project, sub-contractors requested additional payments to cover their increased costs,” it added.

JGC said that a funding deed for the sum of A$757.7M was agreed and payment was made by the Plaintiff (Ichthys LNG-Inpex) to the EPC joint venture for the additional costs.

Subsequently, a dispute concerning the settlement of the additional costs arose, and an arbitration process was conducted in Singapore.

Analysts said that the Yokohama court showdown follows on from the failed arbitration and previous legal cases.

During the course of the arbitration, the Plaintiff (Ichthys LNG-Inpex) demanded that the joint venture returns the full amount of the funds by the end of December 2020, but the JGC, KBR, Chiyoda joint venture refused on the grounds that the correct settlement procedures under the signed deed had not been followed and the arbitration award to determine this had not been made.

Having considered this, the Ichthys LNG-Inpex delivered a letter to the joint venture in January 2021.

The letter requested that the JGC, KBR and Chiyoda venture repay the full amount to the Plaintiff.

However, the EPC joint venture declined the request. The liability share of the partners in the venture are JGC 40 percent, KBR 30 percent and Chiyoda 30 percent.

In the lawsuit just filed in Yokohama by the Plaintiff seeks “subrogation” against the EPC firms for the full amount of the funds provided by the Plaintiff, plus legal costs.

JGC said it was examining the details of this lawsuit and would take appropriate action.

Nov 8 (LNGJ) - JGC Corp., the Japanese energy and LNG engineering contractor, said it had 220 billion yen ($1.93 billion) of outstanding LNG contracts at the end of the latest quarter, including Yamal LNG in Russia, the Coral FLNG project offshore Mozambique and the Ichthys LNG project in the Northern Territory of Australia. JGC said the Ichthys plant owned by Inpex Corp. of Japan and French major Total, was the subject of contract disputes that have gone to arbitration. JGC is part of a consortium with KBR of the US and Japanese firm Chiyoda Corp. that built the Ichthys plant. “Additional costs incurred due to the increase in service scope and other factors should be reimbursed by the client under the agreement,” said JGC. “Some parts of the costs are disputed by the client and these unsettled claims are currently the subject of an arbitration process,” added JGC.

   Another Ichthys project dispute concerns costs incurred by JGC and its partners from taking over a combined-cycle, gas-fired power plant design and construction adjacent to the LNG plant from the original Australian subcontractor who walked away from its subcontract agreement. “Our claims regarding these costs are currently the subject of an arbitration process,” stated JGC.