Gorgon meets the magic pudding

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Not unexpected news today from Chevron which has announced that its monstrous Gorgon LNG project is another $2 billion over budget and will now cost $54 billion. It was originally budgeted at $37 billion.

It also pushed back  its first gas timetable to mid 2015 from late 2014.

This is one reason why we’re seeing the mining capex cliff pushed out. The magnificently expensive seven LNG projects around the country are seeing such regular cost blowouts that it is continuously replenishing the capex pipeline even as it empties.

A uniquely Australian magic pudding!

 

Comments

  1. Fortunately paid for by the shareholders of those companies. Man, the shake out from all this is going to be interesting. The motor building industry folding will be like a passing leaf in a cyclone.WW

  2. mine-otour in a china shop

    How is the cost blow out shown in the measure of real activity in the national accounts?

    Surely the nominal costs would rise as would the investment deflators, leaving the real costs of the project unchanged?

    That said the new engineering construction deflator in the current national accounts is measured as close to zero from peaks of 7% – can that be right?

    If the real cost is the same then the delayed investment should be spread out over more quarters, dampening real activity in the pariod ahead.