Additional $800 Million

THE cost of putting a floating liquefied natural gas plant on the Timor Sea Sunrise reservoir is 10% more expensive than it has been projected and requires now additional $800 million.

On current costs and projected revenues the domestic gas option is not economic.

It confirms that either the domestic gas capital expenditure would have to be reduced by 21 per cent - or $1.25 billion - or prices to customers increased by 40 per cent before the domestic gas case aligns with the economic returns expected from the FLNG plant.

Sunrise is targeting a market of up to 980 terajoules a day, but many gas industry analysts believe this is unrealistic.

While Woodside is indicating there is a gap of more than $1.2 billion between the estimated capital cost of the domestic gas phase and that required to produce an economic return, it was suggested yesterday that internal work done by Shell and Woodside put the gap at about $800 million depending on the type of markets that can be negotiated.

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