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Part 2 Project Phase “Development and Production” ─ Ichthys LNG Project ─ “Challenges and Responsibilities in the Development Phase of the Ichthys LNG Project , a World-Class LNG Project”

The Ichthys LNG Project is a world-class project to develop a gas and condensate field approximately 200 kilometres off the northwest coast of Australia. It is operated by INPEX as a joint venture with major partner Total and Tokyo Gas, Osaka Gas, Chubu Electric Power, Toho Gas and CPC Corporation Taiwan*1.

*1 Subject to the satisfaction of certain conditions precedent

Into the Development Phase with Full
Consideration for Local Communities

The Ichthys LNG Project is the first large-scale LNG project to be operated by a Japanese company. The final investment decision was made in January 2012 and the development phase started. The first production is expected by the end of 2016.
Well streams will be processed at an offshore central processing facility (CPF) to remove liquids from the gas and the gas will be transported via an 889-km pipeline to the Ichthys LNG plant in Darwin, Northern Territory.
The separated liquids will be sent to a floating production, storage and offloading (FPSO) where the condensate*2 will be treated and transferred to carriers for delivery to markets. Detailed engineering and construction of the facilities are underway in various engineering offices and fabrication yards around the world. In Darwin, civil work at the LNG plant site has commenced and the accommodation village which will house 3,500 construction workers at peak is being built.
The Ichthys LNG Project will help meeting the Asia-Pacific region’s increasing energy demand and will strongly contribute to a stable energy supply in Japan. It will also play an important role in the sustainability of local communities.

“In delivering this important project through to the production stage we will be securing a vital, long-term energy supply to Japan and our other customers while delivering sustainable economic and social benefits across Australia. INPEX is committed to contributing to the sustainable development of the communities in which we operate, improving social and economic well-being while minimising any impact on the environment. INPEX is also committed to maintaining its close cooperative approach with government, the community and our other key stakeholders in the areas of operations to deliver the Ichthys Project safely and on time.” (Naoki Kuroda, INPEX Chairman)

“With INPEX underway, we’re already seeing what the oil and gas can do for jobs prosperity and future economic growth”
(Minister Willem Westra van Holthe, Minister for Mines and Energy, Northern Territory)

*2 Condensate: Hydrocarbon liquid dissolved in saturated natural gas that comes out of solution when the pressure drops below the dewpoint

Ichthys LNG Project Milestones

Respect for Aboriginal People

The Aboriginal population in Australia comprises more than 500,000 people and represents 2.5 percent of the national population. In the Northern Territory, where the Ichthys LNG Project processing facilities are being constructed, Aboriginal communities represent 40 percent of the population.
The Ichthys LNG Project acknowledges Aboriginal people as the Traditional Owners of the land and water where the Project’s facilities are being developed. As such, a policy and strategy have been developed to guide Project activity while taking into consideration Aboriginal culture. Similarly, a memorandum was signed with the Larrakia people, the Traditional Owners of the land and water in and around Darwin, to demonstrate the Project’s commitment to a relationship that is built on a foundation of cooperation and mutual respect. Aboriginal Heritage Management Plans have been developed and the Project is working with the Larrakia people to appropriately manage and monitor Aboriginal cultural heritage during Project activities. An example of this is the requirement for Aboriginal heritage monitors to be present during all ground-disturbing activities.

Artwork created by Aboriginal artist in commemoration of INPEX’s RAP launch

“In 2013, we published our first Reconciliation Action Plan (RAP), a public document that outlines the company’s commitments towards Aboriginal communities. The RAP has been developed around the three key thematic areas of relationships, respect and opportunities. Our RAP will be reviewed annually and our achievements made public.”
(Irene Stainton, Senior Aboriginal Advisor, INPEX)

Reconciliation Action Plan (RAP)

The RAP outlines the company’s reconciliation vision and plans to build strong relationships and enhance equality and respect between Aboriginal and Torres Strait Islander (ATSI) peoples where we operate. Under three headings, Relationships, Respect and Opportunities, the RAP sets out INPEX’s tangible and measurable public commitments to ATSI peoples.

Addressing Human Rights considerations in Ichthys LNG Project

Fostering Understanding and Trust with
Local Communities and Government Authorities

Stakeholder briefing on the Darwin Harbour dredging program

The Ichthys LNG Project conducted in-depth environmental, social impact assessments and stakeholder consultations before the development phase. During the development phase, the Ichthys LNG Project is careful to undertake all Project-related activities with the aim of maintaining good relationships with stakeholders.
The Ichthys LNG Project is preparing a social impact management plan (SIMP) for its activities that is based on international standards and more particularly on the IFC Performance Standards on Environmental and Social Sustainability. The purpose of the SIMP is to assess, analyse and manage the Project’s impact on local communities. The SIMP will encompass a wide range of subjects such as training and employment, business opportunities, cost of living, housing, road and marine traffic, public safety, public services, health and cultural heritage.
The Ichthys LNG Project is committed to an open and transparent approach with all stakeholders and the community engagement plan developed for the Darwin Harbour dredging program exemplifies this approach. A wide range of stakeholders were consulted prior to the dredging program’s commencement.
Up-to-date information is being provided through regular bulletins on the Ichthys LNG Project website as well as on notice boards at community facilities such as boat ramps. Feedback from local community members is solicited through a toll-free telephone number, the Ichthys Project website and via face-to-face contact at community events or during Project briefings. Systems and processes such as a stakeholder relationship management system and a community grievance management procedure have been developed to manage and address feedback and complaints made by the community in relation to Project activities.

Respect for Nature and All Possible Considerations for the Environment

LNG plant site, Darwin

Dredging work in Darwin Harbour

Monitoring of coral in Darwin Harbour

The Ichthys LNG Project continues to make great efforts to minimise any impact on the environment where the Project operates. For example, the duration of the Project’s dredging program has been substantially reduced by adopting efficient, state-of-the-art equipment and methodologies and planning intense dredging during the wet season, when the Harbour is naturally murky, which are also contributing to reduce impact on the environment in and around Darwin Harbour.

“When the Project’s baseline surveys were conducted, the monitoring team uncovered 8,971 individuals from 271 species including 79 species of molluscs, 58 worms, 48 crabs, 33 other crustaceans, 26 ants and 19 small mangrove fish.
(Sofie Harrison, Environmental Advisor, INPEX)

Strict environment monitoring programs are implemented to measure the impact of sedimentation and dredging activities and to preserve marine ecology and fauna in and around Darwin Harbour.

An independent panel, the Ichthys Project Dredging Expert Panel (IPDEP), was established to provide advice on the different steps of the dredging program. According to the chairman of the panel, Barry Carbon, “the Ichthys LNG Project is as prepared as it could be at this stage of a project”.

In consultation with the Northern Territory Government, the Ichthys LNG Project is also implementing an environmental offset program encompassing various elements such as a survey of coastal dolphins, the publication of the results of environmental studies commissioned by the Ichthys LNG Project in the Kimberley region of Western Australia, and research projects on the fluid mud layer and microorganisms in Darwin Harbour.
In addition, INPEX actively participates in the biodiversity working group organised by the International Petroleum Industry Environmental Conservation Association (IPIECA) and the International Association of Oil & Gas Producers (OGP).
The design of the Ichthys LNG Project includes many improvements to increase energy efficiency and minimise greenhouse gas (GHG) emissions. For example, the facilities are designed to recycle excess gas and thereby avoid continuous flaring. At the offshore field location, the facilities are connected by a novel high voltage power sharing cable, enabling more efficient power generation and fewer emissions.

Voice

Reinoud Blok
General Manager, GHG,
INPEX

We are investigating options to GHG offset emissions from the Ichthys LNG Project. In 2008, we commenced an assessment project on biological sequestration of CO2 by planting 1.4 million eucalyptus trees. As part of a GHG offset agreement with the Northern Territory Government, we have committed to spending A$37 million on a savannah fire management program in the Northern Territory. The aim of this program is to control wild forest fires systematically using the traditional prescribed burning methods applied by the Aboriginal people. This results in a net reduction of GHG emissions and supports development, training and employment in local Aboriginal communities in the Northern Territory.

Maximising Benefits for Local Communities


Opening ceremony of the North Australian Centre for Oil and Gas


Larrakia Trade Training Centre


Pre-employment training at the Larrakia Trade Training Centre

In order to contribute to the economic development of Australia in general, and the Northern Territory in particular, the Ichthys LNG Project has agreed to an industry participation plan (IPP) to support Australian companies and maximise their participation in Project-related activities. Companies owned by Aboriginal people and companies based in the Northern Territory and wider Australia will have full, fair and reasonable opportunity to compete for work on the Project. Local participation will be maximised where competitively possible, based on health, safety and environment, schedule, quality and cost factors.
It is estimated that approximately 34 per cent of the value of contracts awarded during 2012 will go to Australian business and be realised during the Project phase. This includes 127 Northern Territory-based companies who were successful in winning more than A$1 billion of work from major first tier subcontractors. Additionally, an Aboriginal Business Engagement Strategy is currently being implemented which is aimed at identifying and including Aboriginal businesses directly into the Project’s supply chain. It incorporates supplier forums and business capability and capacity surveys and meets the terms of the Industry Participation Plan with the Northern Territory Government.

“The Ichthys Project has helped develop our business, people and systems to another level.”
(Greg McLaughlin, Managing Director of Mobile Electrics (NT) Pty Ltd)

Significant contributions to social projects and activities have been made, focusing on education, environmental protection and Aboriginal communities. In 2012, a donation of A$3 million was made to contribute to the establishment of the North Australian Centre for Oil and Gas at Charles Darwin University. In 2010, the Ichthys LNG Project donated A$3 million for the construction of the Larrakia Trade Training Centre (Centre). The Centre is now open and to date, more than 450 people have been trained in various fields such as construction, mechanics or electrical engineering.

Stephen Balch,
CEO at Advanced Training International Inc.
which manages the Larrakia Trade Training Centre

Voice

We trained some people last year and put them on the construction site and more than half of those went on to undertake their full apprenticeship training. It really does set them up for a wonderful career for the rest of their lives.

Promotion of the Project with Shared Values on a Global Scale

More than 1,000 personnel from a wide range of nationalities and cultural backgrounds are working on the Ichthys LNG Project in 18 offices around the world. As the Project expands on a global scale, efforts continue to be made to accommodate employees with diverse cultural backgrounds and values. Embracing diversity, mutual respect and collaboration are some of the most important INPEX corporate values.

“Being French and working in Australia on a project operated by a Japanese company is definitely a cultural challenge. It requires flexibility, curiosity, listening and a very open mind. It is also extremely interesting to learn about other cultures and working habits. I have never felt to be an outsider, and my colleagues are very interested to learn more about my country.”
(Marie-Alix du Laz, Corporate Social Responsibility Advisor, INPEX)

Employee retention and career development are important in supporting a rapidly growing company like INPEX, operating in a highly competitive industry. Career development programs have been introduced, including a leadership program to provide professional development for high potential employees as well as a study assistance program to support employees with educational initiatives.

Voice

Janine Gebert,
Human Resources Officer,
INPEX

I started working for INPEX in December 2008 as a Human Resources Administrator.
In the 4.5 years that I have been working here, INPEX has been very supportive in helping me grow in my role and giving me the opportunity to progress in my career. Through INPEX, I have completed Certificate IV in Human Resources and have been promoted to a Human Resources Officer. I feel like a valued employee and look forward to further growth within the business. Thank you, INPEX!

Ichthys LNG Project will start its production in the coming years and will operate for 40 years. INPEX will continue to fulfill its responsibility as an operator to carry out the Project that requires linkages between a corporate and the society at various levels and to contribute to the sustainable development of the communities.

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