Anna Bligh election blow - coal seam gas projects face delays ...

The global giants BG Group, ConocoPhillips, Petronas and Shell have pledged about $20 billion to turn Queensland into the Asia-Pacific region's new energy hub through rival gas export plants. Most of the deals were signed when crude oil was approaching $US150 a barrel.

The companies aim to export 20 million tonnes of gas a year from as early as 2014 - almost seven times Queensland's annual gas consumption. Given such lofty goals, the market has always expected mergers. But with oil - which liquefied natural gas prices reflect - now about $US40 a barrel, the environment is vastly different to what it was even six months ago.

The race to sign up customers remains fierce, but LNG spot prices have plunged, and project costs have fallen only modestly from the inflated peaks reached in the boom.

An oil and gas analyst at BBY, Scott Ashton, said if low oil prices persisted without a similar fall in costs such as for labour and equipment, the projects' returns could move into marginal or uneconomic territory of about 10 per cent. LNG ventures are capital-intensive investments for which 15 per cent is a reasonable return over 20 years.

See - Sydney Morning Herald - New blow for gas export push.