Investment Decision for Gorgon Field Delayed

A final investment decision on the Gorgon LNG project located offshore Australia could be delayed until 2007 due to cost overruns.

Mark Nolan, ExxonMobil Australia chairman, said at an energy conference that the final investment decision probably would not push back first production from the field.

Speaking outside the APPEA conference on the Gold Coast, he refused to comment on speculation the construction costs for the 10 million ton a year plant proposed for Barrow Island had escalated by more than 50%.

Industry analysts say all major construction projects in Australia face massive cost increases on original estimates because of high material costs and substantially higher labor charges.

The Gorgon partners previously said a final investment decision would be reached late in 2006 with project construction beginning in 2007 and deliveries scheduled to start in 2010.

Partners in the project are Chevron as operator with 25%; ExxonMobil with 25%; and Shell with the remaining 25%.