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Australia’s CIMIC sues Chevron over $1.4B Gorgon LNG construction dispute

Gorgon LNG

CIMIC Group has begun court proceedings in the US against Chevron over a dispute involving the construction of the jetty at the Gorgon LNG project in Australia. Chevron photo.

Dispute over jetty at Gorgon LNG

SYDNEY, Aug 22 (Reuters) – Australian construction company CIMIC Group said on Monday it had started court proceedings in the United States against Chevron Corp and KBR Inc, seeking as much as A$1.86 billion ($1.42 billion) regarding a dispute over the jetty at the Gorgon LNG project in Western Australia.

CIMIC was commissioned to build the jetty there in 2009 and issued a notice of dispute regarding the work in February, following a disagreement over changes to the project.

The company said then that it was entitled to A$1.86 billion for the work.

“Negotiations under the contract continue,” CIMIC said in a statement on Monday.

“The commencement of the proceedings has no effect on the negotiation process or CIMIC Group’s entitlement to the amounts under negotiation,” it added.

(Reporting by Tom Westbrook; Editing by Sandra Maler)

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2 Comments on "Australia’s CIMIC sues Chevron over $1.4B Gorgon LNG construction dispute"

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  1. Bassam El Wazni says:

    CIMIC Group had their priced bid based on initial scope of work and specifications from Chevron. After the commencement of work, Chevron (the company) has changed scope of work , specifications and requirements which i.e. Variation order or change order to the contractor (CIMIC) that will make the contractor change his cost evaluation. It is a straight forward EPC project procedure.Hence, CIMIC will win the case in court and another $1.42bn plus $ 500m of interest will add up to the overrun cost of this troubled project.

  2. Bassam El Wazni says:

    Chevron had suffered huge cost overrun in all LNG projects around the word in the last decay and scored a historical failure in its Soyo LNG project and Gorgon LNG project which made the executive vice president of technology & projects Mr. Joseph Geagea to declare the company design defects in its LNG projects when he said ” We’re going to focus on design and engineering. We’re going to ensure those designs.
    So, this is the problem that made chevron suffer in the last decay and what is been said by Mr. Geagea could be used in court in favor of CIMIC in their claim against chevron as it is a declaration from the company of its design defect.

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