UPDATE 2-Chevron adds $15 bln to Gorgon LNG project cost estimate

Wed Dec 5, 2012 6:04pm EST
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* Higher labor costs, strong A$ boost costs

* Chevron's overall 2013 budget just shy of Exxon's

* Wheatstone LNG project in Australia still on budget

By Braden Reddall

Dec 5 (Reuters) - Chevron Corp added $15 billion to the cost of the Gorgon liquefied natural gas (LNG) export complex, as the U.S. oil company's largest single development joins a growing list of Australian LNG projects to run over budget.

The new $52 billion estimate for Gorgon, now 55 percent complete, came on Wednesday alongside Chevron's $36.7 billion overall 2013 budget for capital and exploratory spending. That compares with a 2012 budget of $32.7 billion, and is just shy of the $37 billion annual budget of far-larger Exxon Mobil Corp .

Like other Australian LNG projects, Gorgon's inflated cost is largely due to labor shortages, logistics challenges and the strength of the Australian dollar. Half of the six other LNG plants being built in the country have sustained cost increases averaging more than 20 percent.

Chevron said about one-third of the projected increase for Gorgon from its 2009 estimate of $37 billion, or A$43 billion, was due to the appreciating Aussie dollar and a change in the mix of currencies since the project was sanctioned. Start-up is still due in late 2014.

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 Osaka Gas, Tokyo Gas and Chubu Electric.   Continued...