By Angela Macdonald-Smith
Nov. 27 (Bloomberg) — The initial cost of Chevron Corp.s proposed Gorgon liquefied natural gas project in Australia, currently estimated at about $23 billion, may fall over the next six months as raw-material prices decline, Barclays Capital said.
Such expenses, which will account for at least a fifth of development spending, may be cut in half over the next six months from their recent peaks, analysts led by Paul Cheng said in a Nov. 24 report. That would boost the projects viability, they said.
The Gorgon venture, which includes Exxon Mobil Corp. and Royal Dutch Shell Plc, has yet to get environmental approval for the delayed project and is also working to improve its profitability after a surge in construction costs. ArcelorMittal, the worlds largest steelmaker, said this month it was doubling cuts in global production as the economic slowdown erodes demand.
In light of the recent turmoil in the financial market and the collapse in oil prices, we think Gorgons project development cost could potentially come in below our current estimate, which in turn should boost the projects viability in a lower price environment, Barclays Capital said.
Oil prices have dropped more than 60 percent from their July record and were at $53.36 a barrel in New York at 2:33 p.m. Singapore time. Liquefied natural gas sales contracts are typically linked to crude-oil prices.
At the current cost estimates, the Gorgon venture may need crude oil prices to be between $60 and $65 a barrel in order to generate the minimum acceptable rate of return of 12 percent, the analysts said. At $80-a-barrel oil, the venture could generate a return of 15 percent.
That compares with an estimated rate of return for the North West Shelf ventures latest LNG expansion of 39 percent at $80 oil, Barclays Capital said. The Woodside-operated ventures fifth LNG production unit in Western Australia generates the minimum 12 percent return at oil prices as low as $20 a barrel, it said.
To contact the reporter on this story: Angela Macdonald-Smith in Sydney at[email protected]
Last Updated: November 27, 2008 02:01 EST
This website and sisters royaldutchshellplc.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.
Royal Dutch Shell conspired directly with Hitler, financed the Nazi Party, was anti-Semitic and sold out its own Dutch Jewish employees to the Nazis. Shell had a close relationship with the Nazis during and after the reign of Sir Henri Deterding, an ardent Nazi, and the founder and decades long leader of the Royal Dutch Shell Group. His burial ceremony, which had all the trappings of a state funeral, was held at his private estate in Mecklenburg, Germany. The spectacle (photographs below) included a funeral procession led by a horse drawn funeral hearse with senior Nazis officials and senior Royal Dutch Shell directors in attendance, Nazi salutes at the graveside, swastika banners on display and wreaths and personal tributes from Adolf Hitler and Reichsmarschall, Hermann Goring. Deterding was an honored associate and supporter of Hitler and a personal friend of Goring.
Deterding was the guest of Hitler during a four day summit meeting at Berchtesgaden. Sir Henri and Hitler both had ambitions on Russian oil fields. Only an honored personal guest would be rewarded with a private four day meeting at Hitler’s mountain top retreat.
IN JULY 2007, MR BILL CAMPBELL (ABOVE, A RETIRED GROUP AUDITOR OF SHELL INTERNATIONAL SENT AN EMAIL TO EVERY UK MP AND MEMBER OF THE HOUSE OF LORDS: 
MORE DETAILS:
A head-cut image of Alfred Donovan (now deceased) appears courtesy of The Wall Street Journal.
