Chevron warns future Australian LNG projects at Risk

August 23, 2012
Australia's LNG industry is at a cross-roads because of cost increases and poor labour productivity in the country, Chevron's Chief Executive Roy Krzywosinski said thursday.

The country's LNG industry has around A$180 billion of committed projects and potentially a further A$100 billion of projects that could be "enabled" depending on markets and cost challenges, Mr. Krzywosinski told a business forum in Perth. The industry and the Australian government need to start talking about solving issues such as labor costs and tax, he said.

If reforms aren't forthcoming, some LNG projects may start "falling off, and investment will dry up", Mr. Krzywosinski added.

Chevron, the second biggest oil company by market value after Exxon Mobil, is building the huge Gorgon and Wheatstone gas export projects in Western Australia state. Chevron is targeting an expansion of the A$43 billion Gorgon project in 2014.

The Australian LNG industry has "probably the highest cost base now" anywhere in the world, Shell Australia Chairwoman Ann Pickard said last month.

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