The project’s first LNG shipment undertaken by the LNG carrier Pacific Breeze. Credit: INPEX CORPORATION.

Total has entered an agreement to divest a 4% stake in the $40bn Ichthys liquefied natural gas (LNG) project in Australia to Japanese partner Inpex in a $1.6bn transaction.

The move is due to the project’s cost overruns, the company stated.

Once the transaction is completed, Total will own a 26% interest in the Ichthys project.

Inpex is the operator of the project and will increase its project stake to around 66.24% from the existing 62.24%. Other shareholders include CPC, Tokyo Gas, Osaka Gas, Kansai Electric, JERA and Toho Gas.

Total Exploration & Production president Arnaud Breuillac said: “Ichthys is part of a wave of Australian LNG projects, which have unfortunately experienced major cost overruns and delays during their construction phase.

“Ichthys is part of a wave of Australian LNG projects, which have unfortunately experienced major cost overruns and delays during their construction phase.”

“The final CAPEX estimate provided by the operator is around B$45 to be compared to an updated figure around B$40 in 2017. In line with our capital discipline policy, we have therefore decided to control our capital employed in Ichthys by monetising a 4% stake after the project start-up and de-risking.”

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Breuillac added that Total is committed to the Ichthys project as LNG is a core area for the company.

The Ichthys project comprises offshore facilities and a two-train onshore liquefaction plant. It has a peak production of 8.9Mtpa of LNG and 1.65Mtpa of liquefied petroleum gas (LPG), as well as 100,000 barrels of condensate a day.

In October, the partners shipped the first LNG cargo from the project to the Naoetsu LNG terminal in Japan. This was followed by the first LPG cargo shipment last month.

The closure of the transaction is subject to certain conditions, including receipt of Australian regulatory approvals.