Santos shares have fallen heavily after the cost of its part-owned Gladstone liquefied natural gas (GLNG) project rose by 15 per cent.
Santos said it and its joint GLNG owners had brought forward $US2.5 billion ($A2.49 billion) in spending on the Queensland project to speed up the development of its coal seam gas fields.
Santos, Malaysia’s PETRONAS, France’s Total and Korea Gas Corporation will put the new funds into the drilling of about 300 more wells in the Fairview and Roma areas of the state.
The funds, originally planned for use after 2015, take the cost of the project to $US18.5 billion ($A18.41 billion).
Santos’ share of the new spending is $US750 million ($A746.38 million), which, it said, would be funded from existing finances.
Investors reacted negatively, sending the company’s shares down 59 cents or 5.34 per cent to $10.45.
Santos chief executive David Knox defended the move, saying it was not a reflection of a cost blowout.
He said the additional spending addressed the challenge of delivering gas in the early stages of the project, by delivering on GLNG’s strategy to develop its coal seam gas fields.
“Today’s announcement reinforces our commitment to that strategy through accelerating capital, which we previously expected to spend later in the project life, and in doing so bringing forward some upstream field development,” Mr Knox said.
The GLNG project will convert coal seam gas into liquefied natural gas and transport it through a 420-kilometre pipeline to an LNG plant off the coast of Gladstone.