Posted - Sydney (Platts)--August 1, 2013 - Christine Forster - Platts
Inpex's Ichthys LNG project in northern Australia could come in as much
as $10 billion over its $34 billion budget and 18 months later than
scheduled, Hong Kong-based analysts with Bernstein Research said in a
note Thursday.
"Capex remains the key uncertainty for Ichthys,
although the weakening Australian dollar could provide an unexpected
benefit to cost reduction," Bernstein's analysts said.
The
Ichthys project is operated and 66.07% owned by Japanese upstream player
Inpex, alongside French major Total with 30%. Japanese LNG customers
Tokyo Gas, Osaka Gas, Chubu Electric and Toho Gas hold stakes of 1.575%,
1.2%, 0.735% and 0.42% respectively.
The project involves piping gas from the Ichthys field off Western
Australia 889 km to a liquefaction facility at Blaydin Point near the
northern Australian city of Darwin. The two-train plant will have the
capacity to produce 8.4 million mt/year of LNG.
At its peak,
Ichthys is expected to produce 1.6 million mt/year of LPG and around
100,000 b/d of condensate. "No other LNG project in Australia has such a
high level of condensate production, which makes the economics
incrementally more attractive than other dry gas projects, which have
yet to be developed," the Bernstein analysts said.
"We have seen
cost overruns in Australia up to 50% on some projects," they added.
"Moreover, given that this is Inpex first major LNG project, surprise
should be expected (even if Total [has its] hand on the wheel)."
A
final investment decision on Ichthys was taken in January 2012, when
the project was expected to take five years to construct, implying
startup at the end of 2016 or early 2017.
"We think that startup
of the project is likely to be delayed until 2017 or 2018, based on the
average schedule delay we have seen on other LNG projects in Australia,"
the analysts said. "Assuming a typical delay of 30% for the project
(based on other LNG projects), it is likely that Ichthys could be 12 to
18 months late."
Bernstein forecast a two-year ramp-up from field startup to full LNG production in 2019.
The
analysts estimated that Australian projects, of which there are
currently six under construction at sites around the country, are
averaging cost over-runs of 15% to 50%.
"Based on what we have
seen so far, it would seem highly likely that Ichthys will experience
the same fate," the analysts said. "We have updated cost estimates for
Australian LNG projects, including Ichthys, based upon most recent
information and our projections of how costs are likely to pan out based
on experience thus far. Most of our estimated costs are significantly
above current company estimates. Within our analysis, we take into
account the liquids content of projects. Overall, we estimate that
Ichthys is likely to exceed FID estimates by 30%, with a total cost of
$44.2 billion."
According to Bernstein, the scale of the Ichthys project is "enormous, as is the complexity."
The project was 18% complete at the end of March, with total spending to then estimated at $46.12 billion.
Post to be found at:
http://www.platts.com/latest-news/natural-gas/sydney/inpexs-ichthys-lng-project-could-be-10-bil-over-27253870
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