Chiyoda, the second of the Japanese LNG contractors embroiled in the Ichthys LNG disputes in Australia, has also announced a large extraordinary loss related to the project.
Chiyoda, its compatriot JGC and US company KBR combined to build and deliver the huge Ichthys onshore LNG facilities, but there are ongoing legal disputes with the project operator Inpex and a sub-contractor group that amount to several billion dollars of cost overruns.
Chiyoda said on 30 July it will recognise an extraordinary loss of 20.4 billion yen (US$187 million), and that its financial results in the year ending 31 March 2022 have been downgraded to an estimated loss of 14 billion yen.
The company had recognised the loss due to the "circumstances of the Covid-19 pandemic where the arbitration is anticipated to be further prolonged".
Chiyoda added that it had re-evaluated the potential dispute expenses and the risk of an uncertain result from the arbitration and litigation.
The company said taking this action would enable it to stabilise cash flow and eliminate uncertainties on Ichthys.
The extraordinary loss applies to its dispute with Inpex, not with the subcontractor group, but Chiyoda added there had been no progress in relation to the dispute with the subcontractor group, which comprises GE, UGL and CH2M.