Laing O’Rourke locked in payment row on Australian job

Aaron Morby 3 months ago
Share

Laing O’Rourke has pulled more than 800 workers off a major liquified natural gas project in Australia in a simmering payment row with construction partner Kawasaki Heavy Industries.

Darwin plant Laing O'Rourke
One of four cryogenic tanks under construction at the Ichthys LNG project

The joint venture partners are delivering four huge cryogenic tanks for the $35bn Ichthys LNG project in Darwin.

But Laing O’Rourke claims Kawasaki has not made payments for several months on the project, which is 90% complete.

It is reported that the sum involved amounts to around £125m. Sources told the Enquirer this morning that there were problems with the tanks.

The contract is one of the largest and most critical packages within the Ichthys programme and the cryogenic tanks package consists of two 165,000m3 LNG tanks, one 85,000m3 propane tank and one 60,000m3 butane tank.

IchthysTanksProjectLORbanner

A statement from the UK contractor said: “KHI, which leads this phase, has not paid Laing O’Rourke for its work on this complex and resource-intensive remote engineering project for several months.

“Laing O’Rourke has made significant efforts to resolve the matter, but direct approaches to KHI in Japan over recent weeks have failed to produce a 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 firm added that its priority was now to redeploy staff to the firm’s significant national pipeline of projects while also assisting sub-contractors impacted by the demobilisation.

Unions were told this morning that Laing O’Rourke was pulling off the project, being built for Japanese petrochemical giant Inpex.

Construction, Forestry, Mining and Energy Union spokesman Josh Burling said: “We received a call to inform us that Laing O’Rourke who is in a partnerships to build the cryogenic tanks at Inpex is pulling out of the project.

“The reason behind this is that their partner Kawasaki Heavy Industries appear not to be paying Laing O’Rourke to the tune of A$200m.”

JKC, a consortium of Japanese engineering groups JGC and Chiyoda and US engineering group KBR, which is managing the construction of the onshore facilities for the Ichthys project, said that it expected the dispute between Laing O’Rourke and Kawasaki would be resolved and works would continue.

“JKC is not in dispute with the Kawasaki Heavy Industries and Laing O’Rourke Consortium and the sub-contract for this scope of work remains in place,” the consortium said in a statement.

Latest news

London’s Camden Council to strip cladding from five towers

Tests reveal Chalcots Estate fitted with polyethylene core cladding
13 hours ago

First tests reveal combustible cladding on other towers

Up to 600 towers need to be checked
17 hours ago

Two killed in crane collapse on Crewe construction site

Tower crane comes down on Seddon site
1 day ago

Berkeley cleared to fast-track scheme for Grenfell survivors

Homes and Communities Agency strike deal to buy Kensington Row luxury apartment scheme
2 days ago

Buckingham Group targets £500m revenue in 2018

Profits soar as firm eyes swelling pipeline of stadium projects.
1 day ago

Five more Edinburgh schools found with building defects

Investigation reveals more schools in Edinburgh suffered wall-tie defects
21 hours ago

Galliford/Lagan jv wins £135m RAF Marham hangar

New hangar will house a dozen F-35B vertical take-off jets
1 day ago

CIOB sets up commission to probe control of build quality

Paul Nash to lead urgent review into behaviour that undermines quality in construction
2 days ago

Barratt names new finance boss

Barratt promotes Jessica White to top financial executive
21 hours ago

Opinion: Construction must say never again to another Grenfell

The industry must break with its lowest cost culture
2 days ago

Profits soar at Berkeley despite housing market uncertainty

Berkeley worried about Brexit impact on skills as half its site labour comes from EU
2 days ago

Hewden sell-off raises £120m but trade creditors get pennies

More than £41m was owed to plant hire giant's trade creditors
2 days ago

New Bovis Homes boss buys extra £2m shares

Greg Fitzgerald raises his shareholding to around £3.2m
2 days ago

Kier and Bouygues look for London subcontractors

Major meet the buyer event in the capital next week: Register now
3 days ago

Croydon council to retrofit 25 towers with sprinklers

Council to start £10m sprinkler programme in tallest housing blocks
2 days ago

Yorkshire builder’s MBO deal sowed seeds of own demise

George Hurst & Sons never recovered from an MBO a decade ago saddling the business with debt
2 days ago

Queensferry Crossing to open on August 30

End in sight for contractors who have battled against high winds for six years
2 days ago

Councils ordered to check rainscreening on all buildings

Government to fund fire rating tests on all aluminium composite material clad buildings
4 days ago

Morgan Sindall infrastructure boss to join Lagan

Nick Fletcher to return to Lagan as Chief Operating Officer
3 days ago

Architect makes loss as construction market peaks

Aukett Swanke struggling for commissions as market hits "bottom of the cycle"
3 days ago

Final concrete poured on Mersey Gateway

Bridge project on course to be completed this autumn
3 days ago

Willmott Dixon wins £20m medical school

University works swell to £320m with new Anglia Ruskin School of Medicine in Chelmsford
3 days ago

Worker trapped between roof and work platform

Contractor Pyeroy fined £130,000 for lack of MEWP training
3 days ago

Bristol Uni plan for £300m Temple Meads campus

Construction work is scheduled to get underway on 900,000 sq ft scheme in 2019
4 days ago

Morgan Sindall secures Midlands power network deal

Western Power Distribution two year contract extension worth £60m
3 days ago

Specialists named for £290m SW highways work

21 firms awarded specialist works on new South West England asset delivery model
4 days ago

Vital Energi wins Ardmore package at Ram Brewery

Specialists latest success with main contractor
3 days ago

Experts focus on rapid fire spread up exterior clad columns

Building columns clad in 'flammable' rainscreening allowed Grenfell fire to spread rapidly
4 days ago

Bechtel posts £2.3m UK operating loss

Project management specialist hit by problem contracts
4 days ago

Third of firms dropped from £1bn-plus London housing deal

Notting Hill Housing Trust names 23-strong line-up of favoured contractors
4 days ago

Contractor services