Contractor claims Japanese partner has not paid it ‘for several months’

Laing O’Rourke has withdrawn 800 of its workers from a huge gas station job in northern Australia over a pay dispute.

The contractor is building four cryogenic tanks at the LNG Tanks Project in Darwin for lead construction partner Japanese firm KHI, under a contract signed in 2012. Work began on site mid-2013 and is in its final stages.

In a statement Laing O’Rourke claimed it had not been paid by KHI “for several months”.

The firm said it took the decision to “demobilise” its workers after talks with KHI over recent weeks - including a meeting in Tokyo last Thursday - “failed to produce a satisfactory outcome”.

The firm added: “Laing O’Rourke notified the parties that it would take action to protect itself from the consequences of KHI’s conduct, unless urgent measures to rectify the situation occurred. KHI has declined to take those necessary steps.

“Laing O’Rourke’s priority is to now attempt to redeploy staff to the company’s significant national pipeline of projects whilst also assisting sub-contractors impacted by this demobilisation.”

Laing O’Rourke - which has worked in Darwin for nearly 50 years - said it had ensured all staff, suppliers and contractors were paid during the period of dispute. The company’s other project on the Ichthys site, which is direct for the client JKC, is unaffected.

KHI has been contacted for comment.

The dispute comes at a troubled time for Laing O’Rourke, which late last year posted an overall £246m pre-tax loss for its last financial year to March 2016.

The firm confirmed it made heavy losses of £93m over the year on its troubled PFI hospital job in Canada, the Centre Hospitalier de l’Université de Montréal.

Elsewhere, Laing O’Rourke reported £43m of losses on three jobs carried out by its Design for Manufacture and Assembly (DfMA) business – the offsite arm of the company - and £23m of restructuring costs.

But founder and chief executive Ray O’Rourke said the firm was set to return to profit in the current financial year and also set out plans for the firm to become a £4bn-turnover business within four years.