Asia/Pacific News
Plans for $46 billion Australian LNG Plant Dropped
Australian oil producer Woodside Petroleum Ltd. (WPL) has dropped plans for a $46 billion liquefied natural gas (LNG) project known as Browse LNG as costs have risen, Bloomberg reports.
Partners in the project, including Royal Dutch Shell Plc (Shell) and BP Plc (BP) said they will look into alternatives including a floating LNG plant, a pipeline to existing facilities, or a smaller onshore plant.
"It's the right decision to shelve it," said RBC Capital Markets analyst Andrew Williams.
"I don't think anyone in the investing community thinks the Browse plant was anything but a marginal project."
Australia has nearly $200 billion in LNG projects under development, but their development costs have been on the rise.
"Unfortunately the cost escalation has been such that the total costs for Browse have resulted in the current development concept not being commercial," Woodside Chief Executive Officer Peter Coleman said.
The competing Gorgon LNG venture said in December that its costs have risen 21 percent to A$52 billion ($55 billion) due to a strengthening Australian dollar and higher labor expenses, while another developer, BG, said the cost of one project it is developing in Queensland state rose 36 percent.
Exxon Mobil Corp. [NYSE:XOM] (Exxon) and BHP Billiton Ltd. [BHP] (BHP) announced earlier this month that they plan to build the world's largest floating LNG plant in Australia.
