CIMIC sues Chevron over Gorgon LNG jetty contract

Australia’s CIMIC Group on Monday said it had commenced court proceedings in the United States against energy giant Chevron and LNG engineer KBR following a dispute related to the Gorgon jetty and marine structures contract.

A consortium compromised of CIMIC’s unit CPB Contractors and Saipem was announced in November 2009 as the preferred contractor to build the 2.1 kilometre LNG jetty at the giant Chevron-operated Gorgon project on Barrow Island, 70 kilometres off the Pilbara coast of Western Australia.

However, during the project which was completed in 2014, changes to scope and conditions led to the consortium submitting change order requests, CIMIC said.

CIMIC issued a notice of dispute regarding the work in February this year.

The contractor revealed then that its share in the consortium’s total amount under negotiation equals approximately A$1.86 billion (US$1.41 billion). With interest currently exceeding $500 million and continuing to accrue, the total amount could go well above $2 billion, according to CIMIC.

“Negotiations under the contract continue,” CIMIC said in its statement on Monday, adding that the commencement of the proceedings has “no effect on the negotiation process or CIMIC Group’s entitlement to the amounts under negotiation.”

Chevron’s US$54 billion Gorgon LNG project shipped its first cargo of LNG on March 21 and since then it suffered two shutdowns in March and July.

The giant LNG project is currently exporting the chilled fuel from Train 1. Chevron expects first LNG from Train 2 early in the fourth quarter and from Train 3 in the second quarter of 2017.

LNG World News Staff