UPDATE 1-Japan's Inpex says to make LNG site decision by Q3

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DARWIN, July 18 (Reuters) - Inpex Holdings Inc (1605.T), Japan's biggest oil and gas explorer, will decide on the location for its proposed Ichthys liquefied natural gas (LNG) project in Australia by the end of the third quarter, a company official said on Friday.

"We will be making a decision by the end of the Japanese summer ... that means the third quarter," Inpex's spokesman Sean Kildare told reporters.

Inpex is considering building the LNG plant either at Middle Arm in Darwin in Australia's Northern Territory or at the Maret Islands off Western Australia's Kimberly coast.

Kildare declined to comment if the company was also considering building the LNG plant at the Kimberley region of Western Australia, an area which the state government has proposed to use as a LNG processing hub as a way to contain the industry's environmental footprint and protect aboriginal heritage.

"We can't really say if that is an option...We don't know exactly where it is," Kildare said.

The Western Australia state government said earlier this month that nine sites were being considered for an LNG processing hub in the Kimberley region and work has commenced to narrow down the list of potential sites, with a decision on a short-list expected early in August.

Kildare declined to give an update on the expected cost of the 8 million-tonnes-a-year LNG project, which was previously estimated to cost about between $6-$10 billion.

First LNG output has been delayed to 2014, from an original plan for the end of 2012, Inpex said in May. Inpex has a 76 percent stake in the project, while Total (TOTF.PA) owns the rest. (Reporting by Fayen Wong; Editing by Michael Urquhart)