Australia’s largest gas project Gorgon is almost 80 per cent complete, with two thirds of the gas already committed to buyers.

In an investor update Chevron, the lead operator of the joint venture project, said offshore pipelaying was now complete and 65 per cent of the liquefied natural gas (LNG) from Gorgon had been committed under long-term contracts.

The cost of the energy giant’s LNG project in Western Australia has blown out by $US2 billion ($2.21 billion) to $US54bn.

Also, the start-up date for first gas from Gorgon has been pushed back to mid-2015, instead of the first quarter.

US-based Chevron declined to specify an exact start-up date, instead saying that Gorgon and the company’s nearby Wheatstone LNG projects were scheduled for start-up by 2016.

The original budgeted cost of Gorgon was $US37bn when it was given the green light in 2009.

Chevron now says Gorgon is 78 per cent complete while the smaller but still large $A29 billion Wheatstone project is 30 per cent complete.

Wheatstone’s wharf is operational and development drilling is underway.

Gas marketing is more advanced at Wheatstone, with 85 per cent of the project’s LNG committed under long-term contracts.

The two projects will produce 400,000 barrels a day at full capacity.

Chevron added that its global spending on LNG will peak this year at about $US10 billion, largely due to Gorgon and Wheatstone.

Almost 10,000 people are working on constructing the two massive joint venture LNG projects, with 6000 people working on Gorgon at Barrow Island and 3800 people on site at Wheatstone.

LNG is tipped to replace iron ore as Australia’s top earning export within two decades.

Chevron’s update comes a fortnight after former Labor resources minister and union boss Martin Ferguson blamed the WA maritime union for massive cost blowouts and delays to Gorgon.

Chevron expects demand to lift

Chevron said it expects increasing world-wide energy demand to prompt “significant” production growth over the rest of the decade, while costs level off.

“We believe this compelling growth profile, combined with flattening capital spending levels these next few years, should serve as a strong catalyst for value creation for our shareholders in the years ahead,” chairman and chief executive John Watson said.

Chevron also predicts global LNG demand will almost double by 2025, with more than 100 million tonnes a year of new supply required to meet the world’s energy needs.

The oil giant, which reaffirmed its strategies yesterday ahead of its annual security analyst meeting, said it wants the returns to shareholders to come through a higher share price and bigger dividends.

But during its presentation, the company reduced its production forecast by 6.1 per cent as it slows United States natural gas drilling on lower than expected US gas prices, while higher crude prices reduce its share of production in some countries that curb a company’s share as prices lift, The Australian Financial Review reports.

According to the newspaper, Chevron also said it will sell $10 billion in assets during the next three years, including oil wells, gas fields, pipelines storage terminals and fuel marketing businesses

“We’ve been able to sustain increasing shareholder distributions and, at the same time, reinvest for future growth,” chief financial officer Pat Yarrington said.

“We believe we’ve balanced these objectives well, and that our existing portfolio and new investment projects will support continued value growth for our shareholders.”

Chevron, the second-biggest United States oil company in market value behind Exxon Mobil, said in December that it intended to scale back spending in 2014.

The company said it planned to spend $39.8bn on capital and exploratory investments in 2014, approximately $2bn less than it expected to shell out in 2013.

The company in January posted a drop in fourth-quarter profit as revenue missed expectations by about $9bn and production slumped world-wide.