The cost of the Gorgon LNG project offshore Western Australia has grown 40.5% to $52 billion, operator Chevron said Wednesday.
A cost and schedule review has been completed, with the total cost estimate for the "foundation project" up from A$43 billion (US$37 billion) to A$52 billion (US$52 billion), Chevron said in statement.
Chevron holds a 47.3% stake in Gorgon LNG, with partners Shell and ExxonMobil each holding 25% and Japanese customers Osaka Gas, Tokyo Gas and Chubu Electric Power holding 1.25%, 1% and 0.417%, respectively.
Chevron, in its statement, unveiled a $36.7 billion capital and exploratory spending program for 2013, of which about 90% is budgeted for upstream oil and natural gas exploration and production projects. About 7% of the spending is for the company's downstream efforts, it said.
Despite the higher Gorgon costs, Chevron Vice Chairman George Kirkland said the project economics were still viable.
"Gorgon project economics are attractive," Kirkland said. "While investment requirements have grown, oil prices, which directly impact the overall revenue stream, have increased by approximately 80% over the same time period."
In addition, the LNG project's nameplate capacity has jumped 4% to 15.6 million tons/year, he said.
Chevron said plant startup is planned for late 2014, leading to the first LNG cargo in the first quarter 2015.
"Consistent with long-stated strategies, we're investing in a portfolio of very attractive oil and gas projects that will deliver volume growth and real value to our stockholders," Chairman and CEO John Watson said.
"Next year's program supports several projects currently under construction including our Australian LNG projects and US deepwater developments," Watson said. "As these and other projects come online, we anticipate production will reach our 2017 goal of 3.3 million b/d."
In the Gulf of Mexico, Chevron said its Jack/St Malo project is 55% complete, and its Big Foot development is about 65% complete. First production from both fields is targeted for 2014.
Watson added he continues to continue the company's pattern of "significant" stockholder distributions.
Chevron's 2013 capital program includes $3.3 billion of planned expenditures by affiliates, which the company said do not require it to lay out cash.
