Chevron, like Exxon, attributed the cost increase to higher labor costs, delays and currency exchange rates. In Chevron’s case, the currency impact is responsible for about a third of the cost increase.
Even at the new price increase, Chevron executives say Gorgon is a good deal:
Gorgon project economics are attractive. While investment requirements have grown, oil prices, which directly impact the overall revenue stream, have increased by approximately 80 percent over the same time period. In addition, the LNG nameplate capacity has increased by 4 percent to 15.6 million tons per year.
That’s about 21.5 billion cubic feet a year of export capacity, once the plant begins deliveries in the first quarter of 2015. At today’s price of around $16 to $18 per thousand cubic feet for deliveries to big consumers like Japan and Korea, the Gorgon project represents a substantial new revenue stream for Chevron and its partners.
Chevron’s shares are up about 0.8% this morning, at $105.99 in a 52-week range of $95.73 to $118.53.