Japan’s Inpex (TYO:1605) has filed a claim for $975 million against South Korean yard Daewoo Shipbuilding & Marine Engineering (DSME) relating to the construction of a floating production storage & offloading (FPSO) vessel for its Ichthys LNG project in Australia.
“Most of Inpex’s claims are groundless, and it exaggerated its losses,” DSME said in a stock exchange filing. However, Inpex has submitted a request for arbitration to the International Chamber of Commerce on August 4, noted DSME. “We will continue to work towards settling the dispute,” the company said.
The claim, relating to a 2012 contract for the yard to build and deliver an FPSO for the Ichthys project, amounts to more than half of DSME’s equity capital. The FPSO, which is 336m long and 59m wide, is designed to hold more than one million barrels of condensate, and was delivered in 2017. The massive FPSO, named Ichthys Venturer, is longer than three soccer fields and is an engineering masterpiece, designed for 40 years of operations without dry dock, Inpex says on its website. Indeed, the turret is one of the largest and most complex ever installed on an FPSO, allowing it to weathervane around the turret in response to wind and sea conditions.
However, the Japanese company claims the FPSO was delayed during construction and that triggered commissioning delays. Inpex also claims there are “manufacturing defects.”
But DSME said that “at this moment, it is stably producing liquefied natural gas (LNG), liquefied petroleum gas, and condensate for exports,” DMSE added that Inpex is now litigating issues that it believes were part of previously agreed to changes in the contract signed in March 2012.
Inpex has been involved in several legal battles relating to the Ichthys development. Last year JGC reached a settlement with Inpex regarding a lawsuit that Inpex filed against joint venture company JKC, which consists of KBR, Chiyoda, and JGC, relating to the construction of the giant Ichthys liquefied natural gas (LNG) export project in northern Australia.
The Inpex-led Ichthys LNG project in Australia suffered multiple delays during construction and significant cost blowouts that saw the development cost jump from an expected $34 billion to over $45 billion.