High Costs May Threaten LNG Investments in Australia

Royal Dutch Shell has said that rising construction and labour costs in Australia may threaten new investment in the expanding liquefied natural gas sector.

Dow Jones has quoted Shell Australia Chairman Ann Pickard as saying that the Australian LNG industry has "probably the highest cost base now" anywhere in the world.

She said that though some of the cost is due to higher dollar, Australia still needs to look at the "broader investment conditions" for companies like Shell.

"If we can't keep the prices down and we can't find a way to improve the productivity, onshore LNG plans will become increasingly difficult to build," she added.

Shell is building its Prelude floating LNG facility offshore Western Australia, and also owns 25% of the Chevron Corp. operated Gorgon development.