DIF, Multiplex, Compass and Brookfield Financial have reached financial close on a long-running process to finance and build workers’ accommodation for major oil and gas company Woodside at Karratha in Western Australia.
The deal, which DIF announced closed yesterday, involves the design, build, finance, operations and maintenance of the 604-bed Bay Village facility over 15 years for fly-in, fly-out workers on Woodside’s giant offshore North West Shelf and Pluto LNG projects.
Woodside is making an availability payment to the consortium over the term and will guarantee full occupancy. Karratha is about 1,500km north of Perth, and is one of the closest towns to the LNG projects, which are about 100km off the coast.
Total capital costs are around AUD 93m (USD 65m), comprising about 80% equity and 20% debt, according to a source familiar. Commonwealth Bank is the lender to the project and DIF Infrastructure Fund V is the sole equity investor.
Multiplex is beginning construction now and is due to complete the accommodation by mid-2020, with Compass Group maintaining the operations and maintenance services.
The project was first tendered in 2016 and the consortium was chosen by August 2017, as reported. WA construction company Decmil was the underbidder, according to two sources familiar with the matter.
Construction on the Rankin Road site was originally due to start in February 2018 and it was set to open by early 2019. But it required the state government to agree on executing a lease with the consortium and development approvals from the regional planning authority.
The local council objected on the grounds that fly-in fly-out workers should be housed within the community rather than in separate accommodation on the edge of the town.
It also felt the original up to 30-year term was too long and there was not enough provision for employment of locals once construction was complete.
In June 2018, however, the state government started formal lease negotiations after Woodside said it would increase the number of locals employed at the facility once construction was completed and reduced the term of the deal.
Brookfield Financial and law firm Corrs Chambers Westgarth advised the consortium.