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By Ross Kelly
SYDNEY--Chevron Corp. (CVX) said Wednesday it would continue to evaluate the cost of developing the Gorgon liquefied-natural-gas project over the next few months, without saying whether the current 43 billion Australian dollar (US$44.9 billion) price tag would change.
Chevron's comments came after the Australian Financial Review newspaper reported Wednesday that the project faced a cost increase of more than A$20 billion due to the strength of the local currency and construction delays.
Investors are anticipating a substantial increase after Chevron said in July it was reviewing the cost of Gorgon, which also counts Exxon Mobil Corp. (XOM) and Royal Dutch Shell PLC. (RDSB.LN) as large investors.
Chevron recently noted that the value of the Australian dollar had appreciated by roughly 20% since construction began in 2009. A Chevron spokesman said in an e-mailed statement Wednesday that the cost review for the project, located on Barrow Island in Western Australia state, was ongoing.
"Uncertainty and opportunity still exist in some key assumptions--including logistics, productivity and weather--and we are evaluating these assumptions based on actual performance and will continue to do so over the next few months," the spokesman said.
Citing unidentified sources which it said have knowledge of Chevron's current cost review, the Financial Review report said the U.S. company was poised to announce the increase--from the current budget of A$43 billion--by the end of the year.
Analysts at Deutsche Bank reiterated in client note Wednesday that they expected the project to cost a total A$50 billion.
Write to Ross Kelly at email@example.com
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