Fluor was named EPC contractor on the estimated 7.8-million-tonne-per-year facility—which extracts and liquefies natural gas from coal seams for export to Asia and other markets—in what it said in its 2010 results was a $3.5-billion award. The contractor also won previous project design and early works contracts. Gladstone's final cost was estimated by Santos at $18.5 billion in 2014, about a 32% increase from its initial estimate, driven by a need for increased gas supply and labor, among other project issues, said a 2023 study by the Australasian Centre for Corporate Responsibility.  

In a dispute ongoing since 2016, Santos said Fluor was not entitled to all costs it claimed and was paid for under the contract. The developer also sought to recover payments and gain liquidated damages for claimed late completion of the project. Fluor's contract started under a fixed-price approach but was converted into cost-reimbursable during construction, “not uncommon’ on such complex projects, said Andrew Wittmann, lead analyst at Baird Equity Research in an Aug. 10 research note about the settlement. He noted that Gladstone has been “operating profitably” since its completion.

The case's complexity pushed the court to use outside non-binding “referees to sort through the contracts and millions of pages of documentation submitted,” said Wittmann. The court accepted most of their findings against Fluor, outlined in a 2023 final report to the court, including preliminary payments. A final ruling on the settlement amount, set to include interest and legal costs, will be issued later this year, pending “further arguments and input from both parties” to the court, said Fluor. 

In an announcement, Fluor said it “acknowledges” the court decision in favor of Santos, noting that “the court generally accepted” referees' recommendations “despite [company] objection.” In a July 31 federal filing, Fluor claimed the recommendations were “based on numerous grounds, including [referees'] failure to apply the project’s liability cap” and their “apparent bias.” The contractor has asked the court “to set aside the referees' report in the final ruling,” which could come in the third quarter. 

But Fluor maintains that “the contracting principles addressed by the court have wide-sweeping consequences in the engineering and construction industry."

A company spokesperson did not respond to ENR by story posting time for more details on those consequences. Fluor said it is “exploring its response, including the timing of its appeal.”

Santos, Australia’s second largest oil and gas company, is an acquisition target by a consortium led by the international arm of Abu Dhabi National Oil Co., which has a majority stake in the bidding consortium that also includes Abu Dhabi Developmental Holding Co. and U.S. private equity firm the Carlyle Group.  

The UAE is Australia’s largest trade and investment partner in the Middle East, with $9.43 billion in goods and services traded in 2023. The international arm of the country's national oil company gained board approval in June for a five-year plan to scale up its non-domestic gas, chemicals and energy sector work.