* Ichthys to cost 70 pct more than original estimate
* Australia on track to be top LNG exporter by 2017
* 2011 reserves boost for Total
By Osamu Tsukimori and Rebekah Kebede
TOKYO/PERTH, Jan 13 Japanese group Inpex
and French oil group Total gave the go-ahead
for a $34 billion liquefied natural gas export project that will
see Australia overtake Qatar by 2017 as the world's top LNG
exporter, mostly to Japan.
The budget compared with a Nov. 3 estimate from Total for "a
little more than" $30 billion and an initial $20 billion
forecast made in 2008 for Ichtys, which has reserves of 3
billion barrels of oil equivalent.
"I think we have a highly accurate cost estimate," Inpex
President Toshiaki Kitamura told reporters in Tokyo on Friday.
"The $34 billion capex ensures sufficient economic efficiency,"
he said, adding it was unlikely to increase further.
An energy boom in Australia has led to labour shortages and
cost blow-outs -- the go-ahead means Australia will have a total
of eight LNG projects under way.
Total shares were up 0.7 percent at 1020 GMT, ahead of a 0.1
percent lower European oil and gas sector. Earlier,
Inpex closed up up 1.2 percent, in line with Japan's benchmark
The green light for the 8.4 million tonne per annum (mtpa)
project comes amid an LNG rush in Australia that will see its
export capacity almost quadruple to nearly 80 mtpa by 2017 from
20.1 mtpa now.
Inpex had delayed its final investment decision on the
scheme, which will pipe gas from the Timor Sea to the coastal
city of Darwin in Australia's Northern Territory, from late last
Inpex holds a 72.805 percent stake in the project and Total
has 24 percent. Tokyo Gas bought 1.575 percent on
Thursday, Osaka Gas has 1.2 percent and Toho Gas
Inpex is in talks to sell an additional stake to Total,
which has expressed interest in lifting its stake to 30 percent,
The final investment decision, ahead of a Total board
meeting to approve fourth-quarter results, means the Paris-based
group can book reserves of 720 million BOE for 2011, one dealer
said. This should mean it is able to report rising total
reserves for 2011 -- a key metric for oil companies.
JGC-LED CONSORTIUM IN $15 BLN ORDER
A venture of JGC, KBR and Chiyoda
has won a $15 billion order to build two LNG trains and other
infrastructure for Ichthys, JGC said.
Because the share of lump-sum payments to contractors, as
opposed to cost-plus payments, seems large in the $15 billion
order, Inpex has lowered its exposure to potential cost overruns
in future, which is positive for the operator, said Hidetoshi
Shioda, senior analyst at SMBC Nikko Securities.
About 70 percent of Ichthys LNG will be shipped to Japan,
where demand has risen sharply since the March 2011 earthquake
and tsunami which triggered a nuclear crisis.
In December, Inpex signed around $70 billion of LNG sales
agreements with a consortium of five Japanese utilities
including Tokyo Electric Power Co, Tokyo Gas, Osaka
Gas, Kyushu Electric Power Co and Kansai Electric Power
Co, which will buy a total of 4 million tonnes annually
for 15 years from Ichthys.
Chubu Electric, Toho Gas and Taiwan's CPC Corp have
also committed to buy 0.49 mtpa, 0.28 mtpa, and 1.75 mtpa
Inpex and Total will each take 0.9 million tonnes LNG per
year from Ichthys, with Inpex reiterating its aim to start
production by the end of 2016.
When Ichthys starts production, Inpex expects its equity oil
and gas output to jump around 50 percent from its current level
of 420,000 barrels of oil equivalent per day, Kitamura said.
Ichthys marked the fourth LNG project for Inpex, and the
first time it has served as the operator, having raised about
520 billion yen ($6.8 billion) via a public share offering in
August 2010 to finance the project.
Ichthys is set to become Australia's biggest oilfield. Inpex
obtained the rights in 1998 to develop the project, which at its
peak is also expected to produce 1.6 million tonnes a year of
liquefied petroleum gas (LPG) and 100,000 barrels per day of