Gillards Unions Screw the rest of us with cost blow outs

A review by Chevron of the project estimates the project in north Western Australia has increased from $43 billion to $52 billion.

 

The widely expected announcement of the extra cost comes as the oil and gas giant plans its plant start-up for late 2014, leading to the first liquefied natural gas (LNG) cargo in the first quarter 2015, around a three month delay.

 

"The factors contributing to the increased costs and schedule impacts include labour costs and productivity associated with Barrow Island site infrastructure, logistics challenges and weather delays," Chevron said in a statement on Thursday.

 

In addition, a stronger Australian dollar and changes in the mix of currencies since project began accounted for approximately one third of the projected increase in US dollar outlays, the company said.

 

Chevron vice chairman George Kirkland said despite the cost blowout the economics of the project were still attractive.

 

"While investment requirements have grown, oil prices, which directly impact the overall revenue stream, have increased by approximately 80 per cent over the same time period," he said.

 

He added that the LNG capacity for Gorgon had increased by four per cent, to 15.6 million tons a year.

 

Chevron continued to discover additional gas resources which could support future expansions of our Australian LNG developments, he said.

 

The news about the Gorgon cost blowout comes as Chevron announced an overall international exploration budget of $37 billion for 2013, including major investments in Australia, Nigeria, the US deepwater Gulf of Mexico, Kazakhstan, Angola and the Republic of Congo.

 

Gorgon encompasses 11 gas fields and a 15 million tonne per annum LNG plant on Barrow Island expected to last at least 40 years.

 

Chevron operates Gorgon and has a 47.3 per cent stake, with fellow petroleum majors Exxon Mobil and Shell holding 25 per cent.

 

Sales agreements for up to 25 years have been reached for Gorgon with customers in China, India, Japan and South Korea.

 

Chevron added that its Wheatstone LNG project in WA is currently seven per cent complete and is on budget and schedule.