Royal Dutch Shell PLC's (RDSA) top Australian executive said Wednesday that she is in no rush to commit to an expansion of Chevron Corp.'s (CVX) giant Gorgon gas export project that only months ago suffered a cost blowout in its first stage.
Royal Dutch Shell PLC's (RDSA) top Australian executive said Wednesday
that she is in no rush to commit to an expansion of Chevron Corp.'s (CVX) giant
Gorgon gas export project that only months ago suffered a cost blowout in its
first stage.
"I have no doubt that we will go to an expansion on Gorgon, but I don't
think there is any hurry to rush into it," Shell Australia Chairwoman Ann
Pickard said.
In December, Chevron revealed a 21% cost increase for the Gorgon liquefied
natural gas development in Western Australia to 52 billion Australian dollars
(US$53.8 billion).
Operator Chevron owns 47.3% of Gorgon, with Shell and
U.S.
energy group ExxonMobil Corp. both holding 25%.
"Gorgon is one tough, massive project," Ms Pickard told reporters on
the sidelines of an industry conference.
"It is 55% complete, all the pieces seem to be working real well. Obviously
at this point in time we want to make sure that it stays on track--we don't
want any distractions."
Shell's European management recently suggested the company may slow the pace of
some Australian LNG developments due to cost pressures.
Speaking to investors in
London
late
last month, Shell chief executive Peter Voser said the group intended to take
more time before approving planned developments such as the Arrow LNG project
in
Queensland
state
or the Gorgon expansion.
Spiraling labor costs have contributed to a series of budget overruns at
Australian gas-export projects, including Gorgon.
Chevron had initially said it would make a final investment decision on
building a fourth LNG processing unit at Gorgon in 2013.
However, following the cost increase in the first stage, which is designed to
produce 15 million tons of LNG a year, Chevron is aiming only to begin early
design work for the expansion this calendar year.
Separately, Ms. Pickard played down concerns that its floating LNG technology
under development for Shell's Prelude gas field will shortchange
Australia
on
jobs.
Operational and maintenance jobs will be available for 25-30 years at Prelude,
she said. "80-85% of those jobs will go local." Shell plans to
develop the world's first large-scale floating LNG plant at Prelude, which is
due to start production in 2016.
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