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Chevron Sees Cost Jump at Australia Gorgon LNG Project

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Reuters

LOS ANGELES, Dec 12 (Reuters) - Chevron Corp raised the cost of its giant Gorgon liquefied natural gas (LNG) project in Australia by $2 billion on Wednesday, the second increase in just over a year to take the total cost to $54 billion.

The cost increase at Gorgon was part of a jump in Chevron's overall investment spending to $42 billion this year, far more than the $36.7 billion the company originally budgeted. Larger rival Exxon Mobil Corp's 2013 budget was $38 billion.

Gorgon is among around $190 billion worth of LNG projects under way in Australia which have suffered cost blowouts from mounting costs due to labour shortages and foreign exchange movements.

"Gorgon project economics are attractive," Chevron Vice Chairman George Kirkland said in a statement, adding that the project is 75 percent complete and will start-up in mid-2015.

"We also anticipate 2014 will represent the peak year for spending on our Australian LNG projects as we move them closer to first production," Kirkland said.

Chevron, the second largest U.S. oil company, added $15 billion to the Gorgon budget late last year.

Chevron owns 47 percent of Gorgon, while Exxon and Royal Dutch Shell Plc each hold 25 percent stakes and the rest is shared by Japanese LNG buyers.


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