MELBOURNE, Jan. 20 -- High construction costs, rising natural gas prices, and a failure to acquire enough gas feedstock has caused Melbourne-based petrochemical company Plenex Ltd. to withdraw from a proposed $900 million (Aus.) ammonium plant on the Burrup Peninsula of Western Australia.
Plenex, a wholly owned subsidiary of Plenty River Corp. Ltd., has been trying to establish a plant in the area based on natural gas feedstock from the North West Shelf for 10 years.
The company says the failure to secure gas supplies is a direct result of the rapidly increasing export demand for LNG from the region.
Plenex's partner, explosives manufacturer Dyno Nobel Ltd. of Sydney, will continue to study the feasibility of the ammonium nitrate plant. However the project is now in doubt and may follow the way of several other attempts to establish petrochemical complexes on the Burrup over the last 10 years.
These include a 1.3 million tonne/year methanol plant proposal for Canadian group Methanex, a $1 billion (Aus.) dimethyl ether project for a Japanese group, and a $770 million (Aus.) methanol plant for GTL Resources.
The exits come despite more than $183 million (Aus.) of Western Australian state government money spent on infrastructure on the peninsula.
The only project to go ahead so far has been a $630 million (Aus.) ammonia plant for the Indian-owned Burrup Fertiliser. This is now nearing completion.
Two other planned projects—both $900 million (Aus.) ammonium nitrate plants, one for Indian company Deepak Fertilisers and the other for Agrium Australia—are also unlikely to go ahead in the near term.