One of Australia's largest oil and gas producers, Woodside Petroleum, on Friday confirmed that, on the back of hiked labor charges, the cost of its Western Australia located Pluto liquefied natural gas venture is all set to increase by at least A$672 Million-A$1.1 Billion. The development has put increased pressure on the company to raise funds via a public issue of new shares.
As confirmed by Woodside in a statement, the Pluto projects foundation cost is most likely to be 6%-10% more than the previously estimated A$11.2 Billion, shared by the company in July 2007, because of "lower than budgeted productivity in both onshore and offshore construction". The firm also said that the first shipment of LNG from the unit is scheduled to be sent out by early 2011.
"After three months of peak construction, we now have a better handle of what we can expect going forward", said a Woodside spokesman, while quickly asserting that the cost increase is largely based on expectations of upcoming spending.
The original cost estimate, which was made almost 3 years ago, does not seem quite enough now that the project is almost 82% complete. This has not come as a surprise to many, considering the large size of the venture. Experts are now asserting that with the project almost over, there is a chance that there would not be anymore shocks. Analysts remain divided on the question of whether or not Woodside will tap into the share market to raise funds.