Media release – Cost blow-outs mean gas boom could fail to ignite

Australia’s liquefied natural gas boom is in danger of ending before it even begins, according to John Shipp, Director of the ANDEV/IPA North Australia Project.

Mr Shipp’s warning came in response to news Chevron’s Gorgon LNG project – Australia’s largest ever resources project – could run $20 billion over budget, bringing total costs to around $60 billion. Exxon Mobil’s Papua New Guinea LNG plant, with substantial Australian interests, could also run $3.3 billion over budget.

Mr Shipp said the blow-outs come at the worst possible time, just as Australia tries to attract a second wave of LNG investment. “Investors are searching for certainty that projects will be brought in on time and on budget – something that is not happening in Australia at the moment,” Mr Shipp said.

Australia’s high-cost gas exports could soon have to compete for Asian markets with shale gas from the United States, after BHP announced they will consider exporting US reserves into Asia.

“Despite our proximity to growing Asian markets, Australia’s high cost environment means exports from as far as the United States compete on a similar footing,” Mr Shipp said.

“Australia’s tax and regulatory regime is no longer competitive internationally – we are now one of the most expensive places to operate.”

“Instead of trying to redistribute the benefits of the resources boom, government policies should move towards ensuring the boom continues in both minerals and energy.”

Mr Shipp said that to become more competitive, a low tax, low regulation Special Economic Zone should be introduced in North Australia.

“By reducing taxes and needless regulatory overlap, the government can ensure Australia remains an attractive destination for investment in LNG,” Mr Shipp said.

The Institute of Public Affairs, in conjunction with Australians for Northern Development and Economic Vision (ANDEV), is calling for a Northern Special Economic Zone (SEZ) with lower taxes and a reduced regulatory burden. For more information visit:

Media Comment: John Shipp, Director ‐ North Australia Project, 0429 706 661,