The International Transport Workers’ Federation (ITF) has called on the US Securities and Exchange Commission to scrutinise recent apparent misrepresentations made by multinational energy corporation Chevron regarding the company’s largest upstream development, the Gorgon gas project in northwest Australia.
The ITF argues that Chevron has not provided adequate disclosure about the risks, timing and cost of the Gorgon project. At present Chevron continues to project a mid-2015 completion date for the Gorgon project, which represents the single largest component of the company’s total capital expenditure and exploratory budget.
However, other project owners and customers have signalled they are planning further delay. Chevron is the lead partner on the Gorgon project with a 47.3 percent interest, Exxon-Mobil and Royal Dutch Shell each hold 25 percent each and Osaka Gas, Tokyo Gas and Chubu Electric have 1.25, 1 and 0.417 percent respectively.
The ITF’s concern follows a long history of sudden and suspicious delay announcements by Chevron relating both to Gorgon and other projects.
ITF president and MUA national secretary Paddy Crumlin said the Securities and Exchange Commission should be alert to what is happening.
“This is Chevron’s most important single project and it would appear that shareholders and the public have been receiving a steady stream of misrepresentations about it from the start,” Crumlin said.
“Between 2009 and 2012 Chevron told investors that the project would cost $US37 billion and first gas would arrive in early 2014. Yet suddenly in December 2012 the company reported that the project was over budget by $US14 billion and would be delayed by six months to the beginning of 2015. It seems hard to believe that Chevron only became aware of delays and cost overruns in December.
“Then, in December 2013, the company again reported a delay and a cost overrun of $US2 billion.
“This makes Gorgon the most delayed and over-budget LNG project in Australia and the second most delayed and over-budget energy project in the world today.”
Crumlin pointed out that Chevron has form in the area.
“The company has previously failed to disclose critical information about the LNG operations of Cabinda in Angola, neglecting to inform shareholders that the facility was shutdown,” he said.
“We need to demand better. Chevron continues to emphasise that the Gorgon project is one of the foundations of its short and long-term success in the LNG market, yet it seems that shareholders and the public are not getting the real picture.
“We recommend that the US Securities and Exchange Commission keep a very wary eye on Chevron’s words and actions when it comes to Gorgon.”
To read the letter to the SEC click here.