The cost of the Ichthys LNG project has jumped again to $US45 billion ($62.6 billion) as junior partner Total sells down to operator Inpex.
The French oil and gas giant will sell a 4 per cent interest in the Darwin-based project to Inpex for $US1.6 billion.
Inpex has supplied Total a final cost estimate for the project of $US45 billion.
Total exploration and production president Arnaud Mr Breuillac yesterday said Total sold the equity to reduce the amount of capital it had allocated to Ichthys.
The Ichthys project was approved in early 2012. It was set to cost $US34 billion and start production in 2017.
“Ichthys is part of a wave of Australian LNG projects, which have unfortunately experienced major cost overruns and delays during their construction phase,” he said.
Two huge offshore vessels Inpex had constructed in Korea did not arrive on location off the Kimberley coast until mid-last year, making production in 2017 extremely difficult.
There were also significant delays in commissioning the vessels, and dangerous electrical work forced offshore oil and gas safety regulator NOPSEMA to intervene several times.
The construction of the LNG plant in Darwin was plagued by billion-dollar contractual disputes and a tragic death in late 2017.
An Inpex spokesman said several per cent of the latest 12.5 per cent cost increase was due to costs to start up production.
Inpex has started producing gas at the $54 billion Ichthys liquefied natural gas project off northern Australia, a major milestone for the long-delayed project.
He said the rest of the increase was due to capital expenditure after start-up that may extend for a year or more.
WestBusiness understands that significant rectification work is required on aspects of the Darwin plant.
The first condensate and LNG shipments left Ichthys in October.
The sale from Total to Inpex values the project at $US40 billion.
Inpex now owns 66.2 per cent of Ichthys, Total 26 per cent, and the remainder of the equity sits with five Japanese and one Taiwanese energy utility.
The Ichthys project is expected to operate for 40 years, producing 8.9 million tonnes of LNG, 1.6 million tonnes of LPG and 100,000 barrels of condensate a year.
