Ichthys LNG project gets Australian State nod of approval

Inpex confirmed yesterday that it had received approval from the WA Department of Mines and Petroleum to push ahead with development of the $30 billion Ichthys project off WA’s north, paving the way for Japan’s first LNG development to proceed early next year.

Confirmation that production licences had been offered coincided with Inpex announcing the final round of gas offtake agreements, under which five Japanese utilities will buy a combined four million tonnes of LNG a year from 2017. Osaka Gas, one of the utilities, has also acquired 1.2 per cent of Ichthys as part of its LNG offtake deal. It leaves Inpex with 74.8 per cent of Ichthys and French partner Total with 24 per cent.

Total, which has taken over much of the engineering and design work for Ichthys, has stated that it wants to increase its equity in Inpex. Inpex and Total are expected to make a final investment decision for Ichthys, which analysts expect to cost at least $30 billion, as early as January 12.

The offtake deal, which Inpex has valued at $70 billion over the 15-year life of the agreement, means 70 per cent of Ichthys’ 8.4mtpa LNG production has been sold to Japanese utilities. Ichthys will also produce 1.6mtpa of liquefied petroleum gas and 100,000 barrels of condensate daily.

There has been talk in industry circles that Japanese utilities have been under pressure from their Government to pay a premium for Ichthys LNG to make sure the massive undertaking – the first time Japan has developed and operated an LNG asset – is financially viable. The project will include the world’s biggest offshore processing facility, hovering over the Ichthys gas and condensate fields in the Browse Basin, an 885km gas pipeline to Darwin, and a land-based processing plant on the outskirts of the Northern Territory capital.

The scale and complexity of the project have sparked non-stop market talk that Inpex and Total were struggling to make Ichthys work financially. The partners added to the speculation a month ago when they suddenly and inexplicably asked the DMP to put the production licence application process on hold, while their plan to source much of Ichthys’ project finance from European banks was overshadowed by Europe’s debt crisis.

Confirming yesterday that it had reactivated the application process, Inpex said it had received the DMP’s offer for Ichthys production licences. “We will accept the offer after FID,” Inpex said.

Ichthys’ go-ahead will continue the LNG flurry across Australia, including coal seam methane ventures in Queensland and conventional projects in WA, led by Chevron’s $43 billion Gorgon and $29 Wheatstone and Woodside Petroleum’s $14.9 billion Pluto assets. HUGE INVESTMENT $172b The value of LNG projects in development across Australia

2 thoughts on “Ichthys LNG project gets Australian State nod of approval

  1. Pingback: $34 billion Ichthys LNG Project in Australia to create 3,000 Construction Jobs | jobcontax.com

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