The cost of Royal Dutch Shell and PetroChina‘s Australian joint venture LNG may rise as much as 50 percent from initial estimates, which could force the companies to delay development, a source close to the project said on Friday.

Arrow LNG is one of four on Australia‘s east coast that aim to pump gas from coal seams to export facilities. The estimated investment for all the projects is rising rapidly from the initial price tag of around $70 billion.

The investment estimate for Arrow has already risen 30-40 percent, the source told Reuters, due to the rising price of labour and the cost of meeting stringent environmental regulations. Without some change in the regulations, developers would struggle to move ahead with the project, the source added.

“So far the cost has risen 30-40 percent. Now it is expected to rise by up to 50 percent,” said the source…