Prime Minister Kevin Rudd announced the government's plan to impose a 40% tax on resource profits on Sunday. Since then, the market has been a sea of red with shares in resources and CSG companies tumbling.

The CSG sector alone has lost around $1.9 million over three days of trading.

CSG junior Westralian Gas & Power dropped 18% from Friday's close of 2.2c while Eastern Star Gas shed 15% to close at 77.5c yesterday.

Fellow CSG explorer Bow Energy fell 16% while Metgasco and Icon Energy lost 11% and 10% respectively.

Of the CSG majors, Origin Energy, which holds Australia's largest CSG reserve base and was the first company to say the tax would add a significant cost to its CSG-to-LNG project, fell 4.5% to trade around $15.64.

Origin, with partner ConocoPhillips, is developing the Australia Pacific LNG project at Curtis Island, one of the four major projects earmarked for development at Gladstone.

At a Macquarie Connections conference in Sydney yesterday, managing director Grant King said the resources super-profits tax could delay the project's timetable.

"The RSPT has introduced significant additional cost to APLNG and uncertainty attached to this tax could affect the project schedule," he said.

Origin and ConocoPhillips are targeting a final investment decision on the 14-16 million tonne per annum project by the end of the year. First LNG production is expected in 2014.

While Origin has a diversified earnings base, about half of its production comes from assets that would be impacted by the RSPT.

"The main impact of the RSPT will be on the CSG produced into the Australia Pacific LNG project," King said.

King also said that while it was difficult to estimate the effective tax rate for individual projects, the rate could be as high as 58%.

"The federal government's proposed new 40 per cent tax on resources projects will have a significant negative impact upon the value of projects and the proposal introduces substantial uncertainty that will make it difficult for new projects to proceed," he said.

King's comments mirrored a report from Deutsche Bank earlier this week, which said CSG projects would be the potential biggest losers for the RSPT.

"We believe a resource super-profits tax could have a material impact on the economic viability of proposed CSG-to-LNG projects," the Australian quoted the report as saying.

The bank estimated Origin and Santos's CSG-LNG projects were most at risk and could suffer a decline in net value of up to 40%.

Santos is developing the one-train 3.6MMtpa Gladstone LNG project and is targeting a final investment decision by mid-year.

Santos owns 60% of GLNG and has a binding agreement with Petronas, which holds a 40% stake in the project, for 2MMtpa.

The company is also in discussions with several Asian LNG buyers for the remaining 1.6MMtpa and to purchase an equity stake in the project, however analysts are concerned the tax could make negotiations with potential customers more difficult.

"We estimate that on a like-for-like basis, if implemented in full, the Henry Tax Review would reduce our STO net asset value by 71c per share or 4 per cent to $16.90," Macquarie Bank said in a research note.

The bank added that it expected concerns surrounding Santos's GLNG project to "grow" under the tax proposals, resulting in additional downside, and it would be difficult for the company to sanction the project by mid-year due to the current uncertainties.

Speaking at the company's annual general meeting today, Santos chief executive officer David Knox said the company was reviewing the tax proposals but was confident a final investment decision on GLNG would be made this year.

"Progress on GLNG has been substantial and we remain on target for first LNG deliveries in 2014," he said. "We will make a final investment decision this year."

Knox also said he was confident on being able to make an announcement soon on the discussions held with LNG buyers.

Meanwhile, there has been market speculation on whether Shell and PetroChina's $3.4 billion bid to buy Arrow Energy will be affected by the new tax.

In March, Shell and PetroChina agreed to buy Arrow in a $4.70 per share offer. The acquisition will be an important growth asset for Shell and will help feed its four-train CSG-LNG project capable of producing up to 16MMtpa of LNG.

A Shell spokesperson told PNN the company was reviewing the tax proposals and would look at the package of measures as a whole in determining the overall impact on its business.

However, the spokesperson would not comment on whether the proposals would impact or change the terms of Shell and Petrochina's bid.

"The proposed tax has prompted speculation the two oil companies could pull their offer for the Australian coal seam gas producer," Bloomberg quoted CLSA Asia-Pacific Markets analyst Di Brookman as saying in a report.

"Is it enough to unsettle the Shell-PetroChina bid? We believe categorically no."

An Arrow Energy spokesperson told PNN the company was still reviewing the proposed tax and would not make any comments just yet.