Santos to receive A$692 million from Fluor in settlement for the Gladstone LNG disagreement
In a significant ruling, the Queensland Supreme Court has ordered global engineering, procurement, and construction (EPC) firm Fluor to pay approximately A$692 million to Santos and its co-venturers. The dispute centres around a contract signed in 2011 for the development of production facilities for the Gladstone LNG project.
The Gladstone LNG facility, located on the traditional territory of the Haisla Nation in Kitimat, British Columbia, Canada, is operated by Santos under a joint venture with Petronas, TotalEnergies, and KOGAS. The facility consists of two trains with a capacity of 7.8 million tonnes per annum. Construction of the facilities took place between 2011 and 2014.
The dispute arose due to claims made by Santos that Fluor was not entitled to all the costs it claimed and received payment for, under the contract. Santos also sought to recover amounts in question and claimed liquidated damages associated with the late completion of the project. The liquidated damages claimed by Santos were related to the delay in the project's completion.
The Queensland Supreme Court referred Santos' claims to three referees who provided their final report on 14 July 2023. In their opinion, Santos was entitled to recover certain costs. The court has upheld the majority of the referees' findings.
Further sums owing, and the final amount ordered in Santos' favor (with interest plus legal costs), will be determined in the coming weeks. The exact name of the Fluor Corporation involved in the court ruling is Fluor Australia Pty Ltd.
Recently, it was announced that Fluor Corporation, in a joint venture with JGC Corporation, was awarded the contract to update the Front End Engineering and Design (FEED) for a proposed Phase 2 expansion of the LNG Canada facility. This development comes as the industry continues to evolve and expand, with companies like Fluor playing a crucial role in the development of LNG infrastructure.
As the court case draws to a close, the focus for both parties will shift towards resolving the remaining financial aspects and potentially moving forward with future projects.
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