PERTH (miningweekly.com) – US energy major Chevron has warned of a $5-billion cost blow-out at the Wheatstone liquefied natural gas (LNG) joint venture (JV) project, being developed off the coast of Western Australia.
In its quarterly results announcements last week, Chevron noted that the delay in module delivery at Wheatstone had resulted in the project costs increasing from $29-billion originally estimated in 2011, to $34-billion.
The company in February warned of a six-month delay in first production at Wheatstone, which is now expected for mid-2017.
Project partner Woodside said on Monday that the company was reviewing the cost update, with the company’s initial view being that it would result in a less than 8% increase to Woodside’s total capital cost for the project.
“It is within the range of outcomes expected at the time of the acquisition of Apache’s interest in the Wheatstone JV, and can be funded by existing cash and undrawn debt facilities,” Woodside said in a statement to shareholders.
Woodside in 2015 spent $2.75-billion to buy Apache’s 13% interest in the Wheatstone project, and a 65% interest in the Julimar-Brunello upstream gas development.
Wheatstone will consist of two LNG trains with a combined capacity of 8.9-million tonnes a year, along with a domestic gas plant. While LNG from the first train was expected in mid-2017, first LNG from the second train was expected six to eight months later.
Meanwhile, Woodside has completed its $350-million buy of US-based ConocoPhillips’ Senegal business, which includes a 35% working interest in a production sharing agreement with the Senegal government covering three offshore exploration blocks.
ConocoPhillip’s previous JV partner FAR on Monday said that a valid pre-emptive notice had not been issued, with the junior now invoking its right to resolve the dispute in accordance with the joint operating agreement.