Australia’s CIMIC to pay about $365 million to settle Ichthys LNG dispute

Australian contractor CIMIC said it has agreed to pay A$492.5 million ($365 million) to settle a dispute with JKC Australia over construction work at the Inpex-operated Ichthys LNG export project near Darwin.

UGL, bought by CIMIC in 2016, together with its consortium partners CH2M Hill Australia and General Electric won a deal back in 2012 from Icthys EPC contractor JKC Australia.

JKC is a joint venture consisting of JGC, which has a 40 percent share, and KBR and Chiyoda each with a 30 percent share.

The works included design, construction, and commissioning of a combined cycle power plant for the Ichthys LNG project.

In January 2017, the consortium terminated the contract and subsequently commenced arbitration.

CIMIC said in a statement on Tuesday that the arbitration hearings in respect of the termination of the contract were scheduled to begin on April 14.

However, CIMIC said that it has entered into a conditional, confidential commercial agreement with its consortium partners and JKC resulting in a full and final settlement of all matters in connection with the contract.

Under the deal, CIMIC would pay A$192.5 million in April 2022, and an amount of A$300 million in March 2023, as its contribution to the settlement amounts, it said.

Deal remains subject to conditions

The settlement deal remains subject to a number of conditions precedent related primarily to payment obligations. The arbitration will continue until the completion of these conditions.

CIMC expects these to complete this month.

In October last year, Japan’s Inpex, the operator of the Ichthys LNG development, said it has resolved a legal dispute with the project’s EPC contractor JKC.

JKC won the design and construction contract worth about $15 billion back in 2012 to build the 8.9 mtpa LNG plant at Bladin Point near Darwin.

The contractor has completed and delivered the facility in 2018.

Ichthys LNG is a joint venture between operator Inpex and major partner France’s TotalEnergies.

Other partners include Australian units of CPC Corporation Taiwan, Tokyo Gas, Osaka Gas, Kansai Electric Power but also JERA and Toho Gas.

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