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 ross.kelly@wsj.com
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