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Chevron Corp. (NYSE:CVX) announced yesterday that it has set an energy exploration and investment budget of $36.7 billion for 2013; about 12% more than this year’s budget.
About 90% of the budget has been set aside for upstream crude oil and natural gas projects including exploration and production, whilst 7 percent is intended for downstream business such as gasoline, diesel, and other refined products, and lubricant additives.
The budget will also go towards projects such as the Australian LNG terminal and deep water wells in the US.
Last year Chevron announced that it had approved the development of a multi-billion dollar LNG project in Western Australia which upon completion will be one of the largest natural gas projects in the world; the project has been called Gorgon.
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Part of the reason for Chevrons increased budget maybe due to the fact that the cost for the Gorgon project has risen from $37 billion up to $52 billion. Higher labour costs, logistical challenges, delays due to weather, and a strengthening of the Australian dollar have all been contributing factors to the vast increase.
Gorgon is expected to be completed in late 2014, with the first shipments of LNG going out at the beginning of 2015.
Vice Chairman George Kirkland said, “while investment requirements have grown, oil prices, which directly impact the overall revenue stream, have increased by approximately 80 percent over the same time period. In addition, the LNG nameplate capacity has increased by 4 percent to 15.6 million tons per year.”
By. Charles Kennedy of Oilprice.com
Charles is a writer for Oilprice.com