MELBOURNE, June 19 (Reuters) - GDF Suez SA and Santos Ltd have abandoned plans for a floating liquefied natural gas (LNG) project off northern Australia which was expected to start producing in 2019, the two companies said on Thursday.
The Bonaparte LNG project, which has been under study for more than three years, was to produce 2.4 million tonnes a year for sale into Asia-Pacific markets.
The decision comes amid worries about soaring costs for Australian LNG projects and potentially weaker LNG prices as Russia and other suppliers enter the market.
France’s GDF Suez and its Australian partner Santos said they would go back to the drawing board as the economics of a floating LNG project for gas from their Petrel, Tern and Frigate fields did not stack up at this point.
“While the partners firmly believe the fields have material value, having been fully appraised, their future development using floating LNG technology, although technically robust... does not currently meet the companies’ commercial requirements,” Santos said in a statement.
They said they would consider other options, including a pipeline to Darwin about 250 km (156 miles) away, which could feed into existing LNG projects such as the Ichthys project of Japan’s Inpex and France’s Total or U.S. ConocoPhillips’ Darwin LNG plant.
GDF Suez is 60 percent owner and operator of the Bonaparte project, while Santos owns 40 percent. (Reporting by Sonali Paul; Editing by Muralikumar Anantharaman)