Chevron taps brakes on its LNG project
Chevron said it would tap the brakes on its LNG operations in the Wheatstone and Gorgon projects in Western Australia as the current economic climate does not favour mega projects, Bloomberg reports. Chevron is unlikely to sanction an expansion of its developments. Chevron’s Gorgon and Wheatstone natural gas projects in Australia required more than $71.4 billion in initial capital expenditure, Chevron’s website says, while Bloomberg is calculating the total investment so far at $88 billion. Nigel Hearne, managing director of Chevron's Australia unit said that the climate for developing large Greenfield LNG projects has shifted to smaller developments given the drop in crude oil prices back below $50/bbl. “We’re here to generate a return, I have to pay a dividend back for the money I’ve already spent. I need to start throwing some cash off and pay back the investment,” Hearne said, as quoted by Australia’s Business News. Chevron’s two major Australian LNG facilities have suffered from cost blowouts, delays and poor timing. “I can’t see in the near-term us investing in a fourth train at Gorgon or a third train at Wheatstone,” Hearne says, explaining that Chevron is focused on generating returns on its existing investments.