Oil Change International

Exposing the true costs of fossil fuels

LNG Projects Stall

None of the world’s biggest energy companies approved developments last year to increase production of liquefied natural gas, or LNG, according to an article in the International Herald Tribune.

The main reason is the cost to build LNG plants has tripled in six years, according to Bechtel Group, the biggest U.S. contractor.The cost of building liquefaction plants has risen to as much as $600 million for each million metric tons of annual production from about $200 million in 2000, according to Bechtel.

“Costs are going up and they’re going up far faster than anybody expected,” Andy Flower, a consultant in Britain to the LNG industry and a former BP executive, told the paper. He forecasts that the world LNG shortage will last until at least 2011. Building LNG plants now takes four years, rather than three, because contractors are stretched, said Flower.

Two of the newest and biggest LNG projects are both over budget and late. Shell’s Sakhalin-2 LNG project in Russia has doubled in cost to more than $20 billion. The Snohvit LNG plant, being built by Statoil of Norway, will cost $9.5 billion, almost 50 percent more than first anticipated in 2002.

Comments (1)

  1. MASOUD SADRA says:

    Right now I am involved in a LNG mega project the overall price of onshore lng plant comes to app. 1000USD/metric ton annual production compared to the 600 USD/mmta quoted in your report. what`s your idea? are we blackmailed?

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