Ichthys LNG Terminal

From Global Energy Monitor
This article is part of the Global Fossil Infrastructure Tracker, a project of Global Energy Monitor.
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Ichthys LNG Terminal is an operating LNG terminal in Western Australia, Australia.

Location

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Project Details

  • Owner: Inpex (66.245%), Total S.A. (26%), CPC Corporation Taiwan (2.625%), Tokyo Gas (1.575%), Osaka Gas (1.2%), Kansai Electric Power (1.2%), JERA (0.735%), Toho Gas (0.42%)[1]
  • Location: Browse Basin, Western Australia, Australia
  • Coordinates: -17.961944, 122.236111 (approximate)
  • Capacity: 8.9 mtpa, 1.28 bcfd
  • Status: Operating
  • Type: Export
  • Trains: 2
  • Start Year: 2018
  • Financing: Initial construction loan package of US$20 billion consisting of US$5.83 billion in direct export credit agency (ECA) loans, US$5.37 billion in ECA-covered debt, US$4.8 billion in commercial bank debt from 24 lenders and US$4 billion in sponsor loans[2]

Note: mtpa = million tonnes per year; bcfd = billion cubic feet per day

Background

Ichthys LNG Terminal is an LNG terminal in Western Australia, Australia.[3] Ichthys LNG is named after the Ichthys offshore gas and condensate field in western Australia.

Ichthys LNG is one of the most expensive liquefied natural gas projects in history.[4] Seventy per cent of the gas was slated to go to Japan.[5]

In 2008 Ichthys original budget was about US$20 billion.[6] In May 2017 it was $37 billion and counting.[4]

Ichthys was approved in 2011. Construction on Ichthys began in 2012. It is slated to start-up in 2017.[7] The West Australian reported in September 2017 that 8,500 people are working just to complete the onshore facility at Darwin.[8]

Ichthys has a massive infrastructure. It has two Korean built floating offshore platforms. The gas fields off the Kimberly will feed the LNG. Broome's port and industrial one, 450 miles away, will provide significant support.[8]

In July 2017 CBS News reported that Ichthys LNG may possess a major crack in the floating production storage and offloading unit that could cost billions.[4]

Reuters reported in October 2017 that Wheatstone LNG Terminal in Western Australia is the sixth out of eight projects in a $200 billion Australian LNG construction boom with two more facilities to be launched. The two remaining are Shell’s Prelude Floating LNG Terminal and Ichthys LNG Terminal.[9]

As of 2017, Australia is the second largest LNG exporter after Qatar. The country exports almost 44 million tons a year. [10]

In 2017 it was discovered that the petroleum resource rent tax had failed to collect billions of dollars in revenue north-west Australia. According to research at Monash University, Wheatstone LNG Terminal, Pluto LNG Terminal, and Ichthys LNG Terminal are not subect to commonwealth royalities.[11]

The terminal began commercial operations in November 2018.[12]

Environment

In 2015 The Guardian reported that Australia’s top 20 emitting facilities include the Wheatstone LNG Terminal, Gorgon LNG Terminal, Ichthys LNG Terminal, and Pluto LNG Terminal.[13]

ABC News reported in March 2016 that Ichthys had tried to renege on $30 million worth of its environmental offset programs designed to help mitigate the environmental damage of the LNG.[5]

Government approval was conditional on the company delivering $91 million of environmental offset projects over the projects 40-year estimated life. The company had hoped to dump some of its marine life and land commitments. Ichthys had originally agreed to a joint program with Aboriginal rangers to manage dugong, coastal dolphins and turtles program along the coast.[5]

The company claimed that new studies showed that the environmental effects were not as great as originally anticipated, therefore some offset programs could be dropped.[5]

Financing

In 2013 the project reached financial close with an overall US$20 billion loan secured in four separate tranches:

  • US$5.83 billion in direct ECA loans from Japan Bank for International Cooperation (JBIC), the Export–Import Bank of Korea (Kexim) and Export Finance Australia
  • US$5.37 billion in ECA-covered debt featuring Kexim, K-sure and Nippon Export and Investment Insurance
  • US$4.8 billion in commercial bank debt from 24 international lenders including Citi, HSBC, Mitsubishi UFJ, Mizuho, National Australia Bank and Sumitomo Mitsui Banking Corporation
  • US$4 billion in loans from the project sponsors[2]

Additional US$600 million loan financing from commercial banks was closed in 2016,[14] and a US$3 billion refinancing loan was closed in 2017 featuring mostly the original commercial bank participants.[15]

In June 2020, the largest ever refinancing of project debt on a single facility took place when US$8.3 billion was raised. Citi and Mizuho acted as financial advisers on the refinancing, which involved seven export credit agencies and 28 bank lenders in total.[16] The refinancing partly covered the project's outstanding loan balance of US$15.6 billion as of June 2020. The refinancing was also part of the main shareholder Inpex's cost reduction initiatives launched in response to the decline in oil prices driven by the COVID-19 pandemic.[17]

Expansion Project

Project Details

  • Owner: Inpex (66.245%), Total S.A. (26%), CPC Corporation Taiwan (2.625%), Tokyo Gas (1.575%), Osaka Gas (1.2%), Kansai Electric Power (1.2%), JERA (0.735%), Toho Gas (0.42%)[18]
  • Location: Browse Basin, Western Australia, Australia
  • Coordinates: -17.961944, 122.236111 (approximate)
  • Type: Export[18]
  • Capacity:
  • Status: Proposed[18]
  • Trains: 1 or 2[18]
  • Start Year: 2023[18]

There is a proposed expansion project. Inpex has space to add four LNG production units, called trains, at Ichthys LNG and has five points along its 890 kilometer (553 mile) pipeline from the Ichthys field to Darwin where pipelines from new gas fields could be tied in.[19]

According to the environmental plan, the proposed activities will be undertaken over five years. The offshore work is expected to start in the first quarter of 2021. Offshore installation will begin in 2020 and will be completed in 2023.[18]

Articles and resources

References

  1. "Ichthys LNG Project," NS Energy, accessed July 13, 2020.
  2. 2.0 2.1 "Ichthys LNG Financing," IJGlobal, accessed May 26, 2020.
  3. Ichthys LNG Terminal, Company, accessed April 2017
  4. 4.0 4.1 4.2 Chery Kang, "Investors are worried there's a multibillion-dollar crack in one of the world's largest LNG projects," CBS News, July 7, 2017.
  5. 5.0 5.1 5.2 5.3 Kate Wild,"NPEX joint venture seeks to dump $30 million of federal environmental projects" ABC News, March 30, 2016.
  6. Peter Milne, "Inpex will pay nothing to extract oil and gas," The Western Australian, July 14, 2017.
  7. "2017 World LNG Report" International Gas Union, Accessed June 12, 2017.
  8. 8.0 8.1 Sarah Martin,"Joyce backs gas pipeline from WA to east coast," The West Australian, September 22, 2017.
  9. Sonali Paul, Henning Gloystein, "Chevron starts LNG output at Australia's Wheatstone, first cargo expected in weeks," Reuters, October 8, 2017.
  10. Diane Munro, [http://www.agsiw.org/qatar-moves-ensure-lng-dominance/ "Qatar Moves to Ensure LNG Dominance ,"] Arab Gulf States Institute in Washington, April 17, 2017.
  11. Gareth Hutchens,"Australia must charge royalties on natural gas or lose billions, says expert," The Guardian, February 8, 2017.
  12. First Ichthys Condensate Shipped from Darwin Terminal, Maritime Executive, Dec. 27, 2018
  13. Lenore Taylor,"Direct Action 'safeguards' will allow industry to increase emissions – analysts," The Guardian, September 2, 2015.
  14. "Ichthys LNG Additional Financing," IJGlobal, accessed May 26, 2020.
  15. "Ichthys LNG Refinancing 2017," IJGlobal, accessed May 26, 2020.
  16. "Ichthys LNG refinancing closes," IJGlobal, accessed Jun. 17, 2020.
  17. "Japan's Inpex says it has completed refinancing part of Ichthys LNG project funding," Reuters, Jun. 16, 2020.
  18. 18.0 18.1 18.2 18.3 18.4 18.5 Amanda Battersby, Regulator runs rule over Ichthys subsea work Upstream Online, March 26, 2020
  19. Sonali Paul, Japan's Inpex eyes Australia expansion, including via acquisitions Reuters, September 13, 2019

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