Australia: Ichthys Project Will Cost More than USD 30 Billion, Says Total CEO

The huge Australian offshore gas project Ichthys will cost more than the anticipated total of $30 billion, the head of French oil major Total said on Thursday.

“It will cost a little more than expected for environmental reasons… We had originally said $30 billion,” Total Chief Executive Christophe de Margerie told Reuters on the sidelines of a G20 meeting of business leaders in southern France.

The project, developed by Total and Japan’s Inpex , aims to build offshore facilities to produce natural gas and condensate, and an undersea pipeline stretching 885 km to a liquefaction plant in Australia’s northern city of Darwin.

It is expected to produce 8.4 million tonnes of liquefied natural gas, liquefied petroleum gas and condensate each year.

The project was initially estimated to cost $20 billion but de Margerie said that the company had in recent months been citing the figure of $30 billion in road shows.

Total currently owns 24 percent of the project, a stake the French company would be keen to increase, de Margerie said.

“We would like to have more than that,” he said, giving no details on whether Inpex, which holds the remaining 76 percent of Ichthys, would agree to let Total raise its stake.

The strict environmental conditions imposed by the Australian government to develop the project explain the upward revision in the project’s cost, de Margerie said.

De Margerie said he expected a final investment decision (FID) to be made by year-end, with a view to start production in four years.

He did not comment on the outcome of reported meetings by bankers in Tokyo and Sydney that were aimed at putting together the financing needed for the development.

“In Ichthys like for every big project we have been in, the FID will be made before the financing is in place,” de Margerie said.

LNG project developers typically seek and sign long-term deals to sell their gas before they begin construction. Inpex said earlier this year it had secured buyers to cover the whole annual output of 8.4 million tonnes from the Ichthys project.

By Marie Maitre (Reuters)

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Source: Reuters, November 04, 2011;  Image: Inpex