The giant Ichthys gas field development offshore Australia is facing delays, but once online it will have a bigger than originally expected production capacity.
According to Inpex, a Japanese company operating the field development, production from the Ichthys offshore field, originally expected to start toward the end of December 2016, is now expected to start between July and September 2017.
Meanwhile, INPEX will raise the annual LNG production capacity by approximately 6% to 8.9 MTPA from the initially planned 8.4 MTPA.
INPEX announced its final investment decision on the Ichthys LNG Project, in January 2012.
Ichthys costs on the rise
While the project’s overall development was approximately 74% complete as of June 2015, INPEX updated the production start schedule based on the findings of a detailed review of the project’s development schedule, the company said.
The production delay is expected to increase the project’s costs. However, the increase is expected to be limited to approximately 10%, INPEX said on Friday. To remind, back in 2012, Inpex said it expected the project would take $34 billion dollars to develop. This means that cost overruns are expected to be around 3.4 billion.
Inpex said that the increase in production capacity was based on the company’s recent technical evaluation of the latest technological information pertaining to the entire LNG production system. In addition, the updated schedule reflects the expectation of a shortened time frame between the start of production and the point where stable production is reached.
“The Ichthys LNG Project is a world-class project with an expected operational life of at least 40 years. All the LNG initially planned to be produced from the project has been sold. Of this, about 70% of the LNG is set to be supplied to Japan, and this is expected to further contribute to the long-term, stable supply of energy to the country and improve Japan’s energy procurement risk management,” said Inpex President & CEO Toshiaki Kitamura.
“The project is also expected to make a significant contribution to the social and economic development of Australia, one of the world’s foremost producers of energy. INPEX will guide the Ichthys LNG Project to success, working closely with its project partners, local communities, Australia’s federal government as well as the governments of Western Australia and the Northern Territory, other project stakeholders and the wider Australian public to seek their continued understanding and support.”