By Angela Macdonald-Smith
June 27 (Bloomberg) — Chevron Corp.’s proposed $10 billion-plus Gorgon liquefied natural gas project in Western Australia is “in trouble” and may cost double the latest cost estimate, said Wall Street Access, a U.S. securities firm.
The project may be re-designed and the start-up may be delayed until 2014, Wall Street Access analyst Bernard Picchi said in a report yesterday. Chevron’s partners in Gorgon, Exxon Mobil Corp. and Royal Dutch Shell Plc, are developing “Plan B” options for LNG supply in the Pacific region “just in case Gorgon is dramatically delayed” or worse, he said.
The Gorgon partners last year dropped a 2006 deadline for approving the project for development and haven’t given a revised timetable as they carry out work to improve the project economics. The project schedule will be re-evaluated after the completion of the studies, Chevron said in May.
“No-one is willing to say that Gorgon is dead, but it seems that the partners, Exxon especially, are pressuring Chevron to re-think many aspects of Gorgon to lower unit costs,” Picchi said in the report. “We think it will go ahead, but the project will prove to be more expensive, require more time to develop, and look different than Chevron has indicated to investors.”
The venture partners are all “committed” to Gorgon going ahead, said Mike Edmonson, a spokesman for Chevron in Perth. Chevron can’t determine the cost or schedule for the project as it’s yet to get the final environmental conditions from government authorities, he said.
To contact the reporter on this story: Angela Macdonald-Smith in Sydney at [email protected] .
Last Updated: June 26, 2007 20:41 EDT
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