Laing O’Rourke withdraws employees from Ichthys LNG project amid contract dispute

PERTH (miningweekly.com) – More than 600 workers have reportedly been dismissed from the 8.9-million-tonne-a-year Ichthys liquefied natural gas (LNG) project as a dispute between contractors arose.

Laing O’Rourke, which has been constructing four cryogenic tanks on the project on behalf of contractor JKC Australia LNG (JKC) under a contract signed in 2012, has confirmed that it has withdrawn staff from the Ichthys project, following a dispute with its project partner Kawasaki Heavy Industries (KHI).

Laing O’Rourke claims that KHI, which is leading this phase of construction, has not paid the company for its work on the remote engineering project for several months, and despite “significant efforts” to resolve the matter, there has been no satisfactory outcome.

“After the most recent meeting in Tokyo last Thursday, Laing O’Rourke notified the parties that it would take action to protect itself from the consequences of KHI’s conduct, unless urgent measures to rectify the situation occurred.

“KHI has declined to take those necessary steps,” the company said in a statement.

Laing O’Rourke said the company’s priority now was to attempt to redeploy staff to its pipeline of other projects, while also assisting subcontractors impacted by the demobilisation.

It is estimated that some 650 Lang O’Rourke employees, and a further 200 subcontractors, will be made redundant from the project.

In January, project house UGL terminated its construction and commissioning contract of the combined-cycle power plant for the Ichthys project, following a spat with JKC over project delays and cost blow-outs.

While the cancellation of the contract resulted in 300 people losing their jobs, Ichthys owner Inpex said the development would not affect the project timelines.

Inpex was not available for comment on Wednesday.