Financing a mega LNG project and ‘raising the bar' in securing a social licence to operate

Abstract

A significant part of the development funds for the INPEX-operated Ichthys liquefied natural gas (LNG) Project comes from a record-breaking US$20 billion project financing package, which involves commitments from eight export credit agencies and over 24 global banks. Due to the scale and complexity of the project and the size of the investment, there is a high level of ongoing scrutiny by the project’s lenders with a particular focus on social and environmental performance. Financing from lenders demanded extra requirements to obtain and maintain the project’s social licence. This included a commitment to ensure the project’s plans for managing environmental and social issues met additional obligations, including International Finance Corporation’s Environmental and Social Performance Standards. While these extra commitments posed some challenges, they have also supported INPEX and the project to improve its approach in engaging and working with local communities, including Aboriginal and Torres Strait Islander peoples, in the areas in which the project operates. The auditing of these requirements also provided independent and objective performance reviews that have supported INPEX and the project to continuously improve performance. The requirements have also encouraged INPEX to engage effectively and more openly with stakeholders to further develop and deepen positive and trusted relationships with key stakeholders. Through delivering on commitments to lenders, INPEX has raised the bar, to deliver higher standards of social performance. This has reaffirmed the Company’s commitment to community and social engagement and strengthened our performance within Australia, by adopting best practice approaches.