McDermott International said that it expects to take a charge of around $168m from the Cameron LNG project for the fourth quarter of 2018 owing to certain unfavorable conditions.
Image: McDermott said that the adverse change in estimate for the LNG project is because of unfavorable labor productivity, among others. Photo: courtesy of akiraone/FreeDigitalPhotos.net.
The company in consortium with Chiyoda is executing the Cameron LNG project in Hackberry, Louisiana under an engineering, procurement and construction contract worth around $6bn from Sempra Energy and its partners.
McDermott said that the adverse change in estimate for the LNG project is because of unfavorable labor productivity, and the surges in subcontract, commissioning and construction management costs.
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. Chiyoda said that it is currently 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.
McDermott, in a statement, said: “Operationally, the project is on track to reach a major milestone with feed gas into the facility later this quarter. Construction continues to progress well.
“The gas turbine solo run was completed ahead of schedule, cold circulation of hot oil in Train 1 was completed during the quarter and flare ignition testing was successfully completed on all flares. All of these are crucial steps in the commissioning of Train 1.”
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.
Sempra Energy indirectly owns a stake in the Cameron LNG project. Its partners in the US LNG project are Total, Mitsui and Japan LNG Investment.
Apart from the Cameron LNG project, McDermott and Chiyoda won a contract worth more than $1bn to execute the engineering, procurement, construction and commissioning of the Golden Pass LNG Export Project in Texas for Qatar Petroleum and ExxonMobil. The two companies won the contract in consortium with Zachry Group.