Exxon Says Gorgon LNG Too Expensive, May Move

NEW YORK, (Dow Jones Newswires), Aug 15, 2007

The massive Gorgon liquefied natural gas project off the coast of northwest Australia can't go ahead at current cost levels and may be moved from its proposed location at Barrow Island, Credit Suisse analysts Wednesday cited Exxon Mobil Corp. (XOM) Chief Executive Rex Tillerson as saying.

"All aspects of Gorgon are being looked at, up to and including moving the site from Barrow Island (presumably to onshore)," Credit Suisse analysts Mark Flannery and Edward Westlake said in an email to clients after a 90-minute meeting with Tillerson Wednesday in New York. We "may know more by the end of the year, but all partners are agreed that it cannot go ahead at current cost levels," Credit Suisse said, paraphrasing Tillerson's comments.

An ExxonMobil spokesman immediately declined to confirm the accuracy of the Credit Suisse note.

The comments come as partners ExxonMobil, Chevron Corp. (CVX) and Royal Dutch Shell (RDSA) review costs at the project, which was originally priced at A$11 billion ($9.2 billion). However, Western Australian media reports last month said those costs are likely to have more than doubled.

"The very high costs are still a problem, and ExxonMobil does not expect a final outcome soon," the analysts said, again citing Tillerson.

Copyright (c) 2007 Dow Jones & Company, Inc.