Japan's Inpex Corp <1605.T> gave the go-ahead on Friday for a $34 billion liquefied natural gas export project that will make Australia the world's top exporter of the fuel by 2017, overtaking Qatar.

Inpex said the cost of the giant Ichthys project was higher than estimated by its partner, French energy company Total , and also 70 percent above initial figures calculated in 2008 because it now has more reliable information from the front-end engineering design (FEED).

I think we have a highly accurate cost estimate, Inpex President Toshiaki Kitamura told reporters in Tokyo. The $34 billion capex ensures sufficient economic efficiency.

The green light for the 8.4 million tonne per annum (mtpa) project comes amid an LNG rush in Australia that will see its export capacity almost quadruple by 2017 from 20.1 mtpa now to nearly 80 mtpa.

Inpex delayed its final investment decision on the scheme, which will pipe gas from the Timor Sea to the coastal city of Darwin in Australia's Northern Territory, from late last year due to time constraints.

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Australia's LNG exports http://link.reuters.com/dab29p

Australasia LNG projects map: http://link.reuters.com/nub33s

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Inpex holds a 72.805 percent stake in the project and Total has 24 percent. Tokyo Gas <9531.T> bought about 1.575 percent on Thursday, and Japan's Osaka Gas <9532.T> has 1.2 percent and Toho Gas <9533.T> 0.42 percent.

Inpex is in talks to sell an additional stake to Total, which has expressed interest in bumping its share up to 30 percent, Kitamura said.

The final go-ahead means Australia will have a total of eight LNG projects under way, and the energy rush has already led to cost blow-outs and labor shortages.

JGC CONSORTIUM GETS $15 BILLION ORDER

A venture of JGC Corp <1963.T>, KBR and Chiyoda Corp <6366.T> has won a $15 billion order to build two LNG trains and other infrastructure for Ichthys, JGC said in a statement.

A $34 billion cost is a little bit more than I had expected, said Hidetoshi Shioda, senior analyst at SMBC Nikko Securities.

Because the share of lump-sum payments to contractors, as opposed to cost-plus payments, seems large in the $15 billion order, Inpex has lowered its exposure to potential cost overruns in future, which is positive for the operator, he added.

About 70 percent of Ichthys LNG will be shipped to Japan, where LNG demand has risen sharply since a March 2011 earthquake and tsunami that triggered a nuclear crisis, resulting in many reactors shut for maintenance remaining offline on safety concerns.

In December, Inpex signed around $70 billion worth of LNG sales agreements with a consortium of five Japanese utilities including Tokyo Electric Power Co <9501.T>, Tokyo Gas, Osaka Gas, Kyushu Electric Power Co <9508.T> and Kansai Electric Power Co <9503.T>, which will buy a total of 4 million tonnes per year for 15 years from Ichthys.

Chubu Electric <9502.T>, Toho Gas and Taiwan's CPC Corp have also committed to buy 0.49 mtpa, 0.28 mtpa, and 1.75 mtpa respectively from the project.

Inpex and Total will each take 0.9 million tonnes LNG per year from Ichthys, with Inpex reiterating its aim to start production by the end of December 2016.

When Ichthys starts production, Inpex expects its equity oil and gas output to jump by around 50 percent from its current level of a little more than 420,000 barrels per day of oil equivalent, Kitamura said.

Ichthys marked the fourth LNG project for Inpex, but was the first time the Japanese firm served as the operator.

Inpex raised about 520 billion yen ($6.8 billion) via a public share offering in August 2010 to finance the project.

Ichthys is also set to become Australia's biggest oilfield. Inpex obtained the rights in 1998 to develop the Ichthys project, which at its peak is also expected to produce 1.6 million tonnes a year of liquefied petroleum gas (LPG) and 100,000 barrels per day of condensate.

Shares in Inpex rose as much as 3.3 percent in early morning after the news and ended up 1.2 percent, compared with a 1.4 percent rise in Nikkei average <.N225>. ($1=76.7550 Japanese yen)

(Reporting by Osamu Tsukimori in TOKYO and Rebekah Kebede in PERTH; Editing by Michael Watson and Alex Richardson)