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Energy

Australia's Ichthys LNG dealt blow as major contractor pulls plug

* CIMIC pulls out of building power station to supply Ichthys LNG

* Ichthys operator Inpex says power station 89 pct complete

* Ichthys LNG start-up still aimed for July to Sept 2017

SINGAPORE, Jan 25 (Reuters) - Australia’s $34 billion Ichthys liquefied natural gas (LNG) export project has been dealt a blow as engineering firm CIMIC involved in building the facility’s power station announced on Thursday it was pulling the plug.

“CIMIC Group advises that the ... consortium (building the power station) ... has terminated its contract with JKC Australia LNG Pty Ltd for the design, construction and commissioning of the Ichthys Combined Cycle Power Plant (CCPP) project,” CIMIC said in a statement.

CIMIC was not immediately available for further comment.

The power station is planned to supply the Ichthys LNG export facility with electricity.

A spokesman for Japan’s Inpex, the majority owner of Ichthys LNG, said the power station was 89 percent complete.

And while the spokesman said Inpex did not see this cancellation as “critical” to Ichthys and that it would have “no fatal influence” on its launch, the cancellation will almost certainly delay the project’s production ramp-up, which was scheduled for July to September this year.

Australia’s $200 billion LNG production ramp-up is one of the biggest increases in supply the industry has ever seen, and it will lift Australia over Qatar as the world’s biggest exporter of the fuel.

Even so, most of Australia’s LNG projects currently under construction, including Chevron’s huge Gorgon facility and Royal Dutch Shell’s floating Prelude production vessel, are having trouble keeping within budget and sticking to schedules, and more delays are expected.

“All projects currently being built or expanded in Australia are having trouble with time and cost control. They will almost certainly see further delays,” a source advising LNG producers said on condition of anonymity.

Reporting by Henning Gloystein; Additional reporting by Osamu Tsukimori in TOKYO; Editing by Tom Hogue

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