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* 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 (Reuters) - 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 Nikkei index.
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 year.
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 0.42 percent.
Inpex is in talks to sell an additional stake to Total, which has expressed interest in lifting its stake to 30 percent, Kitamura said.
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.
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 respectively.
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 condensate.