Shell CEO Says Australian LNG Faces Rising Challenges

26-May-2013, Dow Jones Newswire

BRISBANE, Australia–Australia’s booming gas-export industry is facing mounting challenges, including rising costs and the potential for competing supplies from North America, Asia and East Africa, Royal Dutch Shell PLC (RDSA) Chief Executive Officer Peter Voser said Thursday.

“Rising costs have become a significant challenge for companies doing business here,” Mr. Voser told an energy industry conference in Queensland state, which has seen a flood of investment in recent years to convert gas trapped in coal seams to liquefied natural gas, or LNG, for export to Asia.

Mr. Voser’s comments may raise expectations that Shell could shelve or delay construction of an LNG terminal to process coal seam gas at the port of Gladstone in Queensland owned by its Arrow Energy joint venture with PetroChina Co. (PTR).

Still, Mr. Voser, who will retire next year, said the Anglo-Dutch company intends to spend around US$30 billion in Australia over the next five years. Shell owns about a quarter of the Gorgon LNG project under construction in Western Australia state, which is operated by Chevron Corp. (CVX).

Gorgon’s estimated cost has blown out by 21% to 52 billion Australian dollars (US$50 billion) since building work started in 2009. First LNG cargoes are expected from the project in early 2015.

Shell is also building the Prelude LNG project, estimated to cost over $10 billion. The project is likely to be the first in the world that will use a vessel to convert natural gas into LNG for export out at sea, rather than piping it back to a liquefaction terminal on the shore.

Shell is among shareholders in the Browse natural gas joint venture, which last month decided to shelve construction of an over $40 billion onshore LNG terminal in Western Australia, citing rising costs and technical challenges.

Write to Ross Kelly at ross.kelly@wsj.com

http://online.wsj.com/article/BT-CO-20130526-701210.html

Copyright © 2013 Dow Jones Newswires

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About artidj

I started working as a field engineer in Oil & Gas industry back in 1996. I do this news clipping of the industry and the geography I am interested in, mainly for my own information. I'm glad you find it useful.
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