Engineering-construction giant McDermott International said last week it expects to take a fourth-quarter 2018 charge of roughly $168 million related to the under-construction Cameron LNG project, due to what it called “unfavorable conditions.”
The company is a 50-50 partner with Japan’s Chiyoda in the Cameron LNG project in Hackberry, Louisiana, under an engineering, procurement and construction contract worth roughly $6 billion.
Cameron LNG is under development by a consortium of companies including Sempra Energy, Japan’s Mitsui and Mitsubishi, Total and the NYK Line.
McDermott said the adverse change in estimate for the LNG project is because of unfavorable labor productivity, and surges in subcontract, commissioning and construction management costs. Chuyoda calls the situation at Cameron “intensive mobilization workers.”
Earlier, Chiyoda in its latest financial results said that it has been negatively impacted by the increase in incremental construction costs for the Cameron LNG project and the Tangguh LNG project in Indonesia. Chiyoda said it’s negotiating with clients to request reimbursement for the additional costs pertaining to the two projects.
Currently under construction in Hackberry, the Cameron LNG project is expected to produce around 14 million tons per year of liquefied natural gas.
The commissioning process of the first LNG train was initiated by Sempra Energy and its partners last November. The partners at that time also started commissioning process of the support facilities of the $10bn phase 1 of the LNG project, which will comprise three LNG trains.
All the three liquefaction trains are targeted to be placed into production this year.
This post appeared first on Kallanish Energy News.