Regional LNG: Speculation mounts over Gorgon LNG project: Report

Speculation over the future of Western Australia's massive A$11 billion Gorgon gas field project mounted on Monday following the shock writedown by the Royal Dutch Shell Group of its proven oil reserves over the weekend, Australia's Sydney Morning Herald reported Tuesday.

Shell late Friday announced a writedown to estimates of its proven reserves in undeveloped gas fields in Australia and Nigeria by 20 per cent, potentially affecting the development of the Gorgon field in Western Australia.

Shell holds 29 per cent of the gas field in northern WA, which has an estimated 14 trillion cubic feet of gas.

Daiwa Securities analyst Mark Pervan said while he did not think the long-term viability of the Gorgon project was in jeopardy, the Shell writedown could delay the project.

"When you downgrade reserves like Shell has done, then the whole dynamics of the project must change," Mr Pervan said.

"It has to obviously clear a higher hurdle. There would be some impact.

"There may be an implication that the Gorgon project is somewhat delayed."

Paterson Ord Minnett's Simon Oaten said the move was likely to have "seriously annoyed" the Chinese government-owned China National Offshore Oil Corporation (CNOOC).(*)