Gas hub decision reflects high business costs

Kimberley gas hub sitePhoto: A decision to shelve plans for a gas hub at James Price Point in the Kimberley is said to be a sign of the high cost of doing business in Australia. (AAP: Cortlan Bennett)

from ABC

Woodside’s decision to scrap the gas plant at James Price Point in the Kimberley is said to be a sign the high cost of doing business in Australia is placing important investment at risk.

On Friday Woodside confirmed it would shelve the project at James Price Point near Broome because the proposed land-based gas plant was not economically viable.

The move follows BHP Billiton’s decision to abandon the expansion of its Olympic Dam mine in South Australia last year.

RBS Morgans director of research Roger Leaning says high construction costs in Australia mean companies will have to embrace new technology and cheaper processing to make these sorts of complex projects workable.

“We are going to go through a period I think over the next couple of years where efficiency and productivity become the catch phrase,” he said.

Woodside says it is confident the Browse Basin project will proceed.

It is exploring cheaper options including a floating LNG plant.

The former Federal Treasurer Peter Costello says the decision to shelve the multi-billion dollar gas project, shows Australia needs to do more to improve its international competitiveness.

Mr Costello says there are some cost pressures the government can’t control.

But he says there are other things it could do including greater workplace flexibility and helping businesses get skilled labour.

“I actually think 457 visas are very important for the mining industry in particular,” he said.

“I wouldn’t be making that harder, I’d be enabling those resource companies that need skilled foreign labour to find it through that immigration policy.”