LONDON (Dow Jones)
Royal Dutch Shell PLC's Pearl Gas-To-Liquids in Qatar is expected to cost $18 billion to $19 billion, in line with its planned budget, a spokeswoman said Monday, underscoring progress made by the company in controlling its costs.
The news contrasts with the disclosure four years ago by the Anglo-Dutch oil company that costs at a giant Russian liquefied natural gas plant had doubled to $20 billion.
The spokeswoman said: "The project cost is expected to be $18 billion-$19 billion and we remain within the budget set at [final investment decision.]"
"Despite all the pressures from industry inflation, we are within budget estimates we set at the FID stage" in mid-2006, she said.
According to data provided by U.S. consultancy IHS CERA, engineering and construction costs for oil and gas exploration and production projects rose 41% between early 2006 and early 2009.
Shell also said the time of delivery was on track with major construction scheduled for completion by the end of 2010.
When it comes on stream, Pearl GTL will be the world's largest GTL plant. It is designed to produce 120,000 barrels a day of natural gas liquids and ethane, and 140,000 barrels a day of GTL products.
Shell is funding 100% of the development costs for Pearl GTL, under a profit-sharing agreement with Qatar.
The statements by Shell, which started a cost-cutting program mid-2009 under new Chief Executive Peter Voser, contrast with a doubling of the costs announced in 2005 at the Sakhalin II liquefied-natural-gas project in Far Eastern Russia.
The Anglo-Dutch company has since handed over the operator's role at the Sakhlin plant to Russian gas monopoly OAO Gazprom.
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