Exxon's PNG LNG project costs balloon to $19 bn
The more than 20 percent jump in costs to $19 billion was blamed on unfavourable foreign exchange rates and delays caused by disgruntled workers and landowners, and comes after costs to develop liquefied natural gas (LNG) projects in neighbouring Australia to supply the Asian market have also shot up.
Exxon told its partners in a letter published on Monday the project remained on schedule for start-up and delivery of gas in 2014 and forecast production capacity had been increased by 5 percent to 6.9 million tonnes per year.
The PNG LNG project is the impoverished nation's biggest-ever resources development and could lift GDP by 20 percent.
Papua New Guinea has struggled to attract foreign investment to exploit its abundant natural resources due to corruption and unclear regulations.
Shares in the two Australian partners in the project, Oil Search and Santos, tumbled 5.2 percent and 2.4 percent, respectively.
International groups partnering with Australian companies into these projects are starting to feel the high cost environment, Peter Esho, chief Market analyst at City Index Group Sydney, said in a note.
LNG plants are notorious for running overbudget and missing schedules. In Australia, three out of seven projects under construction have announced hikes of an average