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Chevron places big bets on Australia despite costs

07.08.2013  | 

At Chevron's Western Australia Gorgon site, a joint development with Shell and Exxon that plans to ship LNG to export markets in Japan, South Korea and China by 2015, cost estimates have risen by $9 billion, or more than 20%, to $52 billion due to rising labor costs and harsh weather.

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BY JACOB GRONHOLT-PEDERSEN

In January, Chevron moved its Asia-Pacific headquarters to Singapore from San Ramon in an effort to better manage its investments.

The move came at critical time for America's third-largest company, which has placed big bets on Australia even as project costs there have soared.

At Chevron's Western Australia Gorgon site, a joint development with Shell and Exxon Mobil that plans to ship super cooled natural gas to export markets in Japan, South Korea and China by 2015, cost estimates have risen by $9 billion, or more than 20%, to $52 billion due to rising labor costs, harsh weather and logistics challenges at the Barrow Island nature reserve.

Rising costs may jeopardize planned expansion of the project, and analysts say the nearby Wheatstone project, scheduled to come online a year after Gorgon, could face similar hurdles.

Melody Meyer, Chevron's Asia-Pacific head of exploration and production, moved to Singapore late last year, ahead of the operation's official relocation.

A 34-year Chevron veteran, Ms. Meyer stands as one of the few women at the senior-executive level for multinational energy companies.

In an interview with The Wall Street Journal, Ms. Meyer discussed the hurdles Chevron faces in Australia and the challenges of managing more than 11,600 employees in Chevron's exploration and production division across Asia.

Dow Jones Newswires



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