Legal action pipeline
■ Engineering company Monadelphous is embroiled in fresh legal action by suing the developers of a Fortescue Metals Group gas pipeline for at least $33 million over cost blowouts.
Monadelphous is claiming in a Supreme Court writ the 270km Pilbara pipeline was completed about three months late because of delays and disruptions blamed on its clients.
The company installed the structure in 2014 and early 2015 from near Karratha to Fortescue’s Solomon Hub under a $96 million contract with DPB Development Group (DDG) and TEC Pilbara.
It seeking about $19 million from DDG and $14 million from TEC Pilbara — a unit of Canadian power generator TransAlta — plus interest and costs.
DDG is a subsidiary of the ASXlisted DUET Group, which controls the Dampier to Bunbury pipeline.
The writ alleges higher costs were incurred because of a late start, which upset construction plans and pushed the project into the Pilbara’s disruptive summer wet season, and contract variations requested by DDG.
The $183 million pipeline enabled Fortescue to lower its costs by switching its TransAlta-operated power station at the Solomon operation from diesel to gas. Andrew Forrest-chaired Fortescue has a 20year, 100 per cent take-or-pay deal with the pipeline developers.
The writ says Monadelphous’ practical completion of the pipeline was achieved in March 2015 instead of December 2014 as agreed.
It accuses DDG of not providing adequate access to the site until November 2014, several months later than required under the contract.
One of the reasons cited for the delays was construction consent from the State Government being obtained 24 days later than scheduled.
Monadelphous and DDG clined to comment.
A Monadelphous joint venture is in a $200 million dispute in Queensland over blowouts at Gladstone’s Wiggins Island coal export terminal.
Monadelphous is suing the developers of a Fortescue River gas pipeline over cost blowouts.