Royal Dutch Shell Plc  .com Rotating Header Image

Sydney Morning Herald: Gas set to put on a spurt as contractors expand

Email Print Normal font Large font Angela Macdonald-Smith
September 22, 2007

ROYAL Dutch Shell, the world’s biggest non-state producer of liquefied natural gas, said the jump in construction costs that had been delaying new supply projects was set to ease as engineering companies expanded.

For the first time in at least two years, engineering contractors were starting to seek new work in LNG project design, Linda Cook, the executive director of Shell Gas & Power, said yesterday in an interview. Technology advances such as floating LNG plants would also help overcome cost hurdles, she said.

Shell has a record six LNG production units under construction worldwide, including in Nigeria, Qatar and Russia, as it seeks to meet rising demand for cleaner fuels. In Australia it has stakes in the producing North West Shelf venture, the $10 billion-plus Gorgon LNG project, the Sunrise and Browse fields, and this year found gas near Inpex’s Ichthys field.

“I do see contractors who are players in the LNG construction and engineering business around the world increasing their own capacity in order to better supply customers like ourselves,” Ms Cook said. “That makes me hopeful we’ll see at least stabilisation in costs going forward, if not improvement. Also technology can play a role.”

The Hague-based Shell, Europe’s biggest energy company, faced a doubling of the construction budget for the Sakhalin-2 LNG project in eastern Russia, to about $US20 billion ($23 billion), while the Chevron-led Gorgon project off Australia’s north-west coast is delayed as the partners work to address a jump in costs.

Global consumption of LNG will outpace the 1.6 per cent annual gain in energy demand for the next 25 years, according to the International Energy Agency. LNG demand is set to more than double by the middle of next decade, Purvin & Gertz, a Houston energy consulting firm, said in June.

Ms Cook said she was hopeful about progress at Gorgon, in which Exxon Mobil has a stake. Shell earlier this month agreed to sell 1 million tonnes a year of LNG from the project to PetroChina for 20 years, without giving a date for deliveries to start. “All major projects similar to Gorgon around the world are facing cost pressures,” Ms Cook said. “We have a strong partnership in Gorgon and we’re working together well to address” cost increases.

Ms Cook declined to prioritise Shell’s several potential LNG projects in Australia, which include an indirect interest in the Pluto venture through its 34 per cent stake in Woodside Petroleum. Australia accounted for at least 10 per cent of Shell’s annual exploration budget of between $US2 billion and $US2.5 billion, she said.

It was too early to say how Shell might develop its discovery in a permit adjacent to Inpex’s Ichthys field. “It’s quite normal for companies in these positions to explore potential to co-operate in order to have the most efficient development possible,” Ms Cook said. Inpex, which has teamed with Total to develop Ichthys, said on Thursday the partners would go ahead with the project without Shell.

Bloomberg

http://www.smh.com.au/news/business/gas-set-to-put-on-a-spurt-as-contractors-expand/2007/09/21/1189881773542.html

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

1 Comment on “Sydney Morning Herald: Gas set to put on a spurt as contractors expand”

  1. #1 agnes
    on Sep 22nd, 2007 at 12:53

    What on earth does she know about projects?? All hot air from our US cousin.

Leave a Comment

%d bloggers like this: