NewsBite

Inpex's Ichthys LNG plant in mid-construction at Blaydin Point near Darwin
Inpex's Ichthys LNG plant in mid-construction at Blaydin Point near Darwin

How Darwin’s $50 billion LNG plant Inpex dream became a reality

THE action list for securing Inpex’s $50 billion LNG plant ran into the thousands across multiple spreadsheets.

One by one, each task was identified and allocated to the Northern Territory Government or Inpex — which now sits at Blaydin Point in Darwin Harbour — through a network of committees and subcommittees.

It took five years to work through the list and hundreds of thousands of man hours.

Then finally, on January 14, 2012 the NT News’ front-page headline screamed the deal had been done.

The deal was the largest of its type in the world.

The single largest construction project in Australia would now commence in the Northern Territory — a project that will supply gas to the Japanese for the next four decades.

The Inpex gas plant at Blaydin Point in Darwin Harbour
The Inpex gas plant at Blaydin Point in Darwin Harbour

The relationship foundations for bringing Inpex to the Territory started with Clare Martin, the NT’s first female chief minister.

In January 2007, having heard a whisper Inpex were looking for a site, she and Paul Tyrell made a beeline for Japan.

Tyrell was the then-head of the Territory public service, leading from the Department of Chief Minister.

“The idea came about because there was constant controversy about the proposal in WA,” Martin told NT Weekend last year.

“There was a movement in the Kimberly that didn’t want it. There were issues around native title.

“The idea to pursue it was Paul Tyrell’s and I thought ‘why not? … nothing ventured nothing gained’.

“We made an appointment with the Inpex Chairman Kunihiko Matsuo and jumped on a plane to Japan.”

A trusted confidante, Tyrell had been through the construction of the railway and the Darwin LNG.

It was the possibility of a pipeline to the Darwin LNG which brought Inpex and the fields they held to the north to his attention.

It was he, according to former chief minister Martin, who suggested there was an opportunity to steal Inpex from under the noses of the Western Australian Government.

Paul Tyrell passes documents to then-Chief Minister Clare Martin for signing. Picture: CLIVE HYDE
Paul Tyrell passes documents to then-Chief Minister Clare Martin for signing. Picture: CLIVE HYDE

BEFORE embarking on the trip, Clare Martin phoned her WA Labor colleague, then Premier Alan Carpenter, to alert him of the bold plan.

“We didn’t have any idea on how Inpex would take this, so I thought as a courtesy to Alan Carpenter (I’d tell him) we were going to put an offer to Inpex,” she recalls.

“He said, ‘you may as well go for it’.” That initial lunch was relaxed.

“We had a lunch with the chairman and one of his senior people, and I remember he said to me, after I declined a glass of red — ‘you will find my English is a lot better after you join me in the red’,” Martin said.

Those early meetings were crucial in building the relationship which would become the foundation for Paul Henderson — who would become Chief Minister in November 2007 — and his team to further engage and eventually consummate the deal.

What no one knew was that while WA was Inpex’s Plan A, Darwin was not their Plan B, as suggested by the Martin/Henderson Governments.

Martin says that on her recent trip to South Korea to be the “godmother” to one of the offshore floating platforms, she discovered Darwin was actually their Plan C. They were also secretly scoping an offshore processing facility.

As chief minister, Henderson, who had been the resources minister, took on the opportunity with both hands. “Inpex first came on to the radar after the Darwin LNG was built,” Henderson reflects.

“Clare identified the NT had a broad advantage with location, and we had also heard Inpex were struggling to find a location in Western Australia and gain the attention of the WA Government.”

Former Chief Minister Paul Henderson took on the opportunity with both hands
Former Chief Minister Paul Henderson took on the opportunity with both hands

WA in mid 2000s was booming — they had a number of major projects being canvassed, including Barrow Island on the northwest shelf.

“We just rolled the dice to see what could happen and demonstrate we were a can-do place,” Henderson says.

“When I became chief minister I made it clear to the cabinet and the public service that securing Inpex was our main priority.

“My first overseas trip was to Japan and I took Paul Tyrell with me for relationship continuity.” Tyrell was later replaced by Mike Burgess as the head of the public service.

Tyrell would stay on to co-chair the gas taskforce and lead many of the committees and subcommittees which worked through the action tasks.

“We took a couple of simple messages to the Japanese, the largest of which was certainty,” Henderson said.

“We told them we had a site at Wickham Point which was zoned appropriately, was government land, was cleared of native title and we could provide them absolute certainty on the regulatory pathway they had to take.”

This regulatory pathway was critical given the NT is the one jurisdiction in Australia which does not allow third party appeals to government decisions.

“It meant they had certainty on issues like the environment, and they wouldn’t be subject to southern non-government organisations frustrating legitimate decisions through court challenges,” Henderson says.

“And Darwin itself was a major attraction. Being a capital city for them meant attracting a workforce near a major city was much more appealing than out in the middle of nowhere.”

Burgess said the NT Government set up a highly structured process of engagement at a senior level to convince Inpex the NT knew what it was doing. “The chart we set up had a couple of thousand individual actions (NT Government and Inpex) would both undertake just to get the project to financial close — not to build it but financial close,” he said.

“That was an ongoing and constantly reviewed. I had a hand-picked team working on these items.

“It was a five-year process but it felt a lot longer.”

Wickham Point LNG plant in Darwin in 2004
Wickham Point LNG plant in Darwin in 2004

THE ride to closure was a rollercoaster for everyone — the Japanese and Territorians alike.

“I did numerous trips to Japan to meet with not just government interests, but financial interests,” Henderson says.

“This was an issue of energy security for the Japanese economy and … this was a significant investment for the Japanese Government.”

To add to the certainty case, the Henderson Government legislated the Project Development Agreement. The PDA was the path the development of the project would take.

They didn’t have to, but did it anyway to give the Japanese further confidence. The global financial crisis between 2008 and 2010, and the tsunami which hit Fukushima in 2011, had impacts on the speed of finalising the deal.

But in moving away from nuclear power plants, the impetus on securing the gas became critical.

Throughout this process, what was never in doubt was the confidence the Territory had in negotiating the biggest deal being done on the planet.

“We constantly backed ourselves throughout this process … we were going to give this the absolute best shot we can … it is going to underpin the Territory economy for decades to come and we weren’t going to die wondering,” Henderson says.

Wickham point LNG plant in February 2006
Wickham point LNG plant in February 2006

The ongoing Inpex presence over the next 40 years will boost the NT economy by around $400 million per year. But for all the handwork in securing the Inpex deal, in August of 2012 the Henderson Government was voted out of office.

The bush deserted Labor at the ballot box.

One of the impacts from focusing so strongly on Inpex was other parts of the electorate started to suffer. And at the time there were substantial issues to deal with, including the GFC legacy, merging of local councils in the bush and the federal intervention.

Henderson is philosophical, arguing voters rarely get it wrong. But he does raise the question of ‘what next?’ Henderson, Martin, Tyrell and Burgess are all of the belief there is more for the Territory than what has occurred so far.

Martin believes the Territory could capitalise on attracting industry here using the gas here rather than shipping it down south.

“I don’t know if the work has been done on the next phase,” she says.

“My view is that we have major pieces of infrastructure here now, and we should look at how we maximise them.

“We have the railway for example, and let’s look at how we use it to move things south or north.”

Martin’s successor says he hasn’t “seen anyone talking about how we capitalise on Inpex’s presence”.

“What are we doing strategically to capitalise on it? Some of the world’s most sophisticated kit is operating at Inpex,” says Henderson.

“But what are we doing to attract all of the other industry associated with the plant relocating to the Territory? I think this has dropped off the radar for shiny new projects.

“Big greenfield projects rarely come along — what nobody is talking about is, ‘how do we leverage off Inpex being here?’

“There has to be a debate and an engagement about that issue. We’ve got one of the world’s biggest factories over there in the harbour, but how are we going to leverage it?

“The second phase of Inpex is not just its operation. It is also supply, engineering, logistics, technology … all of it. We are on the international stage. All the platforms off the northwest of the Territory have to be supported, maintained and developed for the next 40 years.

“I really saw this as opening the door to world-class jobs in a world- class industry right here, for our kids in the Territory. I think our best days are to come.”

Add your comment to this story

To join the conversation, please Don't have an account? Register

Join the conversation, you are commenting as Logout

Original URL: https://www.ntnews.com.au/news/special-features/in-depth/how-darwins-50-billion-lng-plant-inpex-dream-became-a-reality/news-story/f03e61c886a281415e7d53a87ebad902