Shell Australia head says no rush to expand Gorgon LNG project


Shell Australia head says no rush to expand Gorgon LNG project


PERTH -- Shell top Australian executive said that she is in no rush to commit to an expansion of Chevron 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 LNG development in Western Australia to $53.8 bn. Chevron owns 47.3% of Gorgon, with Shell and ExxonMobil 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 CEO 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 MMt of LNG a year, Chevron is aiming only to begin early design work for the expansion this calendar year.

Shell plans to develop the world's first large scale floating LNG plant at Prelude, which is due to start production in 2016.

Dow Jones Newswires

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