South Australian energy and resources company Santos and French partner GDF Suez have scrapped plans to build a multi-billion-dollar floating gas plant off Darwin’s coast.

The companies have baulked at the high costs of the proposed Bonaparte project.

They have cited an insufficient rate of return, risk and capital exposure as reasons for exploring other options to the planned floating LNG facility.

The decision adds to concerns about soaring construction costs threatening $180 billion in investment in future Australian LNG projects.

LNG has been held up as a future high-export income earner for Australia as regional demand for gas as an energy source rises but high costs and competition from Russia and the US are threatening that.

Santos and GDF Suez are reviewing piping the gas 250km to Darwin where it could be used in the Darwin LNG project’s plant.

“While the partners firmly believe the fields have material value, having been fully appraised, their future development using floating LNG technology, although technically robust as demonstrated during extensive pre-FEED studies, does not currently meet the companies’ commercial requirements,” Santos said in a statement.

Santos shares fell two cents to $14.47 in early trade.