Woodside flags costs increase at Pluto LNG project

Woodside petroleum today flagged a costs increase on between $672 million and $1.1 billion at its Pluto LNG project in Western Australia.

The announcement has increased pressure on the company to raise capital to meet to higher cost, with the most likely scenario an issue of new shares.

Woodside said in a statement the foundation cost of Pluto is likely to be 6%-10% above its original July 2007 estimate of A$11.2 billion due to lower than budgeted productivity in both onshore and offshore construction.

Woodside reaffirmed its scheduling guidance, however, saying that the project is on schedule to ship LNG from its first production unit by early 2011.

Investors didn’t react well the announcement, sending WPL 2.8% lower on the day.