Chevron 2014 Spending to Fall Even as Gorgon LNG Costs Increase

Chevron Corp. (CVX) plans to spend $39.8 billion on capital projects next year amid rising labor costs, increased drilling expenditures and currency fluctuations from Canada to Iraq.

The budget for floating platforms, oil-refinery repairs, pipelines and rig rentals is 5.2 percent less than Chevron’s 2013 estimated outlay of $42 billion, the San Ramon, California-based company said in a statement today. The cost estimate for the Gorgon natural gas export complex in Australia rose to $54 billion, the second increase in 13 months. Weather and logistical delays will postpone startup of the project off the northwest coast by about three months.

Chairman and Chief Executive Officer John S. Watson is counting on deep-water oil discoveries in the Gulf of Mexico and gas exports from the Indian and Pacific oceans to boost output 20 percent by the end of 2017. Chevron aspires to become the world’s third-largest producer of liquefied natural gas, or LNG, after Qatar and Royal Dutch Shell Plc, by the end of the decade.

Chevron’s full-year 2013 capital spending exceeded the original $36.7 billion forecast because of acquisitions that required additional spending, the company said.

Chevron may sell some oil and gas fields that promise leaner returns than the new prospects, Chief Financial Officer Pat Yarrington told analysts and investors during a Nov. 1 conference call. Yarrington didn’t specify what the company might be considering exiting, nor did she provide a time frame.

Chevron said Nov. 22 its 240 million-barrel Rosebank field off the Scottish coast currently doesn’t make economic sense to develop.

Exxon Mobil Corp. (XOM) is the largest energy company by market value, followed by PetroChina Co. (857), according to data compiled by Bloomberg.

To contact the reporter on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net

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