AFR... Chevron Australia boss Roy Krzywosinski says there is a need to claw back competitiveness in the LNG industry as its Gorgon project is due to start up later this year. Chevron Australia boss Roy Krzywosinski says there is a need to claw back competitiveness in the LNG industry as its Gorgon project is due to start up later this year.
Chevron's head in Australia, Roy Krzywosinski, is set to sound a fresh warning about a lack of progress on improving the competitiveness of its LNG industry, which is threatening a potential $100 billion of projects in the pipeline, especially given the drop in oil prices.
"As we look ahead, we need to claw back competitiveness and create the investment environment here in Australia that helped us harness the gas boom in the first place," he will tell the APPEA oil industry conference in Melbourne on Wednesday.
"We can no longer rely on strong commodity prices to bail us out."
Chevron, which is leading $80 billion of investment in two LNG projects in Western Australia, Gorgon and Wheatstone, has repeatedly raised the alarm over rigid and inflexible industrial relations systems, uncompetitive taxation, red and green tape, high labour costs and inadequate productivity. Its $US54 billion Gorgon project, due to start up later this year, has run $US17 billion over budget.
The Gorgon partners, which include Shell and ExxonMobil, have delayed moving ahead with an expansion as they focus on bringing the foundation project into production. Service sector concerns
Mr Krzywosinski is also set to raise concerns about the service sector's ability to cope with the rapid surge in LNG production in Australia as the plants built in the $180 billion wave of construction move into production. Australia's LNG sector is set to go from seven producing LNG units to 21, including one floating LNG venture, within little more than two years. The projects will require hundreds of millions of dollars a year of investment, in operations, maintenance and upstream work.
"The industry's capacity has never before been stretched or tested with the addition of 13 new gas trains," he says.
Forging a successful services industry, is not just a matter for that sector, but for everyone in the industry. It "requires all hands on the wheel," Mr Krzywosinski will say.
An updated study by ACIL Tasman carried out for Chevron on the economic benefit of the Gorgon and Wheatstone projects has found that they will contribute more to GDP than originally expected. Across the life of the projects, the GDP contribution from Gorgon is now expected to be about $400 billion, with another $150 billion from Wheatstone.
Poster Comment:
May have difficulty exporting gas from North America unless allow Chinese to build LNG port plants.