Exxon's PNG LNG project costs balloon to $19 bn
Developments in Australia have primarily faced cost jumps due to increased labour costs, a high Australian dollar, and stiff competition for resources.
Strong demand from Japan and other Asian countries has helped lift the prospects of LNG projects in Asia-Pacific, but competition is also heating up with new supplies set to emerge from North America and East Africa.
Oil Search said the increase in the final estimated costs at PNG LNG was considerably beyond the upper end of its expectations.
Oil Search intends to fully review the revised estimates and is committed to working with the operator to seek to mitigate these estimated cost increases, Oil Search Managing Director Peter Botten said in a statement.
The firm said it expected the increase would be funded in line with the project's existing finance terms of 70 percent by debt and 30 percent by equity contributions from the projects partners.
FX BIGGEST PART OF COST RISE
Santos said it had ample liquidity to fund its higher share.
With over $6 billion in cash and undrawn debt facilities, Santos is in a strong position to fund all of its capital programs, Santos Chief Financial Officer Andrew Seaton said. Even including the higher costs, PNG LNG remains a highly robust economic project. Oil Search said that foreign exchange was the single biggest cause of the cost increase at $1.4 billion at PNG LNG.
The Papua New Guinea kina has risen 20 percent
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