Royal Dutch Shell could postpone a decision on its Arrow
liquefied natural gas (LNG) project on Curtis Island in
Queensland, Australia, until 2014.
The venture, which is owned by Shell and PetroChina, is
forecast to cost $20 billion (B) amid rising energy project
costs in the country.
"We are in preparation of a potential final investment
decision of that project somewhere in the 20132014
timeframe," CEO Peter Voser said.
Costs for Australian LNG facilities are climbing as the
nation looks to overtake Qatar as the world's largest exporter
of LNG, amid burgeoning Asian demand.
"Cost inflation is showing in many different segments, and
that forces us to find other ways of constructing our projects,
or taking final investment decisions at the right time or
postponing," Mr. Voser added.
Energy firms are moving forward with seven LNG projects in Australia, estimated to
cost $180 B, even as growing construction costs and competition
put the development of future projects in jeopardy.
Deutsche Bank AG has estimated that Arrow alone will cost
more than $20 B. Shell, BG Group, Santos Ltd. and
ConocoPhillips all have LNG projects under development along
the Queensland coast.
Shell is considering a plan to combine its Arrow gas
resources with those of third parties, said Director of
International Production Andy Brown. "With three projects under
construction at Curtis Island, it
makes sense to think about the best value solution for Shell,
and get the timing of an LNG project right," Mr. Brown
Meanwhile, Gorgon LNG, a Chevron-led Australian LNG project
in which Shell has a 25% stake, could cost as much as $50 B,
according to Deutsche bank AG. The project is 50% complete.
After discovering more than 40 trillion cubic feet of gas,
Shell and Chevron are reviewing a plan to build a fourth
production unit at Gorgon. Mr. Brown said that the decision on
the proposed fourth train will be made next year.