Ichthys LNG's Cost Balloons, Admits Total
The Ichthys LNG project's overall capital cost has increased to US$45bn, said its partner Total December 13, explaining its decision to reduce its equity stake from 30% to 26%. It will sell the 4% stake to the project's operator Inpex for US$1.6bn, subject to Australian regulatory approvals.
Ichthys is part of a wave of Australian LNG projects which have unfortunately experienced major cost overruns and delays during their construction phase, Total admitted.
"The final capex estimate provided by the operator is around $45bn, compared to an updated figure of around $40bn in 2017. In line with our capital discipline policy, we have therefore decided to control our capital employed in Ichthys by monetising a 4% stake after the project start-up and de-risking," explained Total upstream chief Arnaud Breuillac, insisting that the company would remain "committed to the Ichthys project" as it would contribute to Total's growth both in production and cash flow from 2019 and beyond.
Ichthys' earlier capex estimate was $34bn so the latest figure is 32% higher and means that Ichthys' project cost per metric ton (mt) of LNG installed is roughly 50% more expensive than the $54bn Chevron-led, 15.6mn mt/yr Gorgon LNG project, until now the most costly.
At full capacity, Total said that Ichthys will supply 8.9mn metric tons per year of LNG, 1.65mn mt/yr of liquefied petroleum gas and 100,000 b/d condensate. The first LNG cargo was exported this year on October 22; the first offshore condensate cargo October 1; and the first LPG cargo November 16. Both LNG trains are now fully operational.
Inpex acknowledged that it will increase its stake in Ichthys from 62.245% to 66.245%. The other participants, after the increase, will be Total 26%, plus the others unchanged: Taiwan’s CPC Corporation (2.625%) and five Japanese utilities: Tokyo Gas (1.575%), Osaka Gas (1.2%), Kansai Electric Power (1.2%), Jera (0.735%) and Toho Gas (0.42%).
The banner photo shows the onshore Ichthys liquefaction facilities at Bladin Point at August 2016 (Credit: Inpex Australia)