Sydney (Platts)--21Feb2013/609 am EST/1109 GMT
The cost of the coalseam gas-based Australia Pacific LNG project in the eastern state of Queensland has blown out to A$24.7 billion (US$25.5 billion), from A$23 billion in July 2012 when the final investment decision was made on the second production train, joint venture partner Origin Energy said Thursday. The LNG project is held 37.5% by Australia's Origin, alongside ConocoPhillips (37.5%) and Sinopec (25%). The project, located on Curtis Island in the port city of Gladstone, will have a capacity of 9 million mt/year from two LNG production trains. "Train one is on track to be completed on or ahead of schedule, with the first LNG cargo expected in mid-2015," Origin said in a statement. "Train two is expected to be completed at least three months earlier than the FID schedule, and startup is now expected in the fourth quarter of calendar 2015. As a result of the improved schedule, revenues from this train are expected to be generated earlier than previously anticipated." Origin Managing Director Grant King said the increase in cost reflected increased certainty around well and gathering locations for gas for train two. That had enabled "more accurate cost estimates, changes to CSG water management scope to align with revised government policy, cost increases for third-party LNG projects in which Australia Pacific LNG has an interest, and an increased allowance for project contingency," he added. "It is important to note that project contingency now exceeds 10% of the forecast cost to complete," King said. "It has always been the plan for Australia Pacific LNG to undertake a thorough review of the project when 20-30% complete. All major contracts are awarded, civil works on Curtis Island are essentially complete, the majority of wells are located and planned, and a substantial amount of work has been undertaken on both the upstream and downstream components of the project. For the above reasons we believe that our revised project estimate is an appropriate guide for the completed project's schedule and cost." At the end of December 2012, the upstream component of the project was 29% complete and the downstream component was 31%. Australia Pacific LNG is one of three CSG-to-LNG projects currently under construction on Curtis Island. The other two, operated by BG Group and Santos, respectively, have also suffered from budget blow-outs since final investment decisions were taken.--Christine Forster, christine_forster@platts.com--Edited by Lisa Miller, lisa_miller@platts.comSimilar stories appear in LNG Daily. See more information at http://www.platts.com/Products/lngdaily