October 16, 2018 / 8:01 AM / a month ago

Japan's Inpex to load 1st LNG cargo from Ichthys project this week -sources

TOKYO, Oct 16 (Reuters) - Japanese energy explorer Inpex Corp is this week set to load the first liquefied natural gas (LNG) cargo from its long-delayed Ichthys project in northwestern Australia, sources familiar with the matter said.

The shipment would be an important milestone for Inpex, the operator of Japan’s biggest overseas investment and the first major project where it is the lead operator. The $40 billion project has seen multiple delays and significant cost overruns.

An Inpex spokesman in Tokyo said that production had been going smoothly and that shipments of LNG and liquefied petroleum gas (LPG) were set to begin, but he declined to comment on commercial matters including the schedule for shipments.

The LNG vessel Pacific Breeze was located close to the Ichthys LNG Terminal near Darwin with a departure date of Oct. 17, according to Refinitiv data. After the first shipment, three LNG cargoes are scheduled to load next month, according to one of the sources.

It was not clear where the cargo was heading, but some sources said in May that the commissioning LNG cargo from Ichthys would be exported to Inpex’s Naoetsu LNG receiving terminal in Japan.

In a statement last year announcing the ship’s name, Inpex said Pacific Breeze would supply 1.75 million tonnes of LNG annually from Ichthys to Taiwan’s CPC Corp.

The move comes about two weeks after the first condensate shipment from Ichthys’ floating production, storage and offloading (FPSO) facility.

Ichthys has seen multiple delays and cost overruns of billions of dollars due to technical difficulties. It was originally slated to start in 2016.

At full operation, Ichthys is expected to produce 8.9 million tonnes of LNG a year, along with about 1.7 million tonnes of LPG and about 100,000 barrels per day of condensate, an ultra-light form of crude oil.

The company expects to take two to three years to reach full production.

Inpex in August said Ichthys would help add net profit of 10 billion yen ($89 million) in the second-half of 2018/19, down from a May outlook of 24 billion yen, due to the delays. Inpex holds 62.245 percent of Ichthys, France’s Total 30 percent, with the rest spread amongst CPC and Japanese utilities Tokyo Gas, Osaka Gas, Kansai Electric, JERA Corp and Toho Gas. ($1 = 112.1200 yen) (Reporting by Aaron Sheldrick and Osamu Tsukimori in TOKYO, Jessica Jaganathan in SINGAPORE and Sonali Paul in MELBOURNE; Editing by Joseph Radford)

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