LOS ANGELES Dec 12 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
"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.
Investors are putting increased pressure on the world's
biggest oil companies to rein in spending and return more money
to shareholders - a trend Shell recently warned against because
it may create oil shortages in the future.
Chevron's overall LNG production, including that from
another Australian plant being built called Wheatstone and a
newly opened development in Angola, is expected to double to the
oil-equivalent of 460,000 barrels per day (boepd) in 2017.
That is a major part of the production Chevron plans to add
as it pursues its 2017 production target of 3.3 million boepd,
up from about 2.6 million currently.
In a statement, Chief Executive John Watson said 2013 would
be "a relative peak year for investments."
The company also plans to spend $39.8 billion on projects
and exploration in 2014, as it finishes work on huge
developments in Australia as well as the Gulf of Mexico.
Chevron has three projects in the works in the Gulf of
Mexico: Jack/St Malo, Big Foot and Tubular Bells. The Jack/St.
Malo project is scheduled to start next year, while the Big Foot
project is forecast to start in the second quarter of 2015,
The San Ramon, California-based company also included in its
list of major projects the expansion of the Caspian Pipeline in
Kazakhstan and Russia and development of the Usan and Agbami
deepwater fields in Nigeria, among others.
As for the "downstream" budget for refining and chemicals,
Chevron set that at $3.1 billion, compared with a budget of $2.7
billion this year.