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Chevron s Gorgon LNG project on Barrow Island.
Chevron's Gorgon LNG project on Barrow Island.

UPDATE 7.40am: Chevron has increased the cost of the ground-breaking Gorgon LNG project cost for a second time, warning that Australia's biggest resources development would cost at least $US54 billion.

Chevron also pushed back the first gas target date to the middle of 2015, compared with earlier hopes of producing maiden LNG at the start of 2015.

The cost blowout compares with the initial Gorgon estimate of $US37 billion when Chevron and key partners Royal Dutch Shell and Exxonmobil made their final investment decision in 2009, and a revision to $US52 billion a year ago.

"Gorgon project economics are attractive,” Chevron vice chairman George Kirkland said this morning.

"We continue to make steady progress against key project milestones."

The Gorgon cost blowout was confirmed as part of Chevron's capital budget outlook for next year.

The US giant said its worldwide capital and exploratory investment budget for 2014 would be $US39.8 billion, $US2 billion lower than this year's likely spend which Chevron described as its "relative speak" in terms of spending.

However, it said next year would represent peak spending on its two flagship WA LNG projects, Gorgon and the $US29 billion Wheatstone development.

Chevron has battled to contain Gorgon costs and has been "value engineering" to try to keep a cap on the mega-project's budget.

WestBusiness reported earlier this year that internal estimates by the Gorgon project team had put the final cost at up to $US59 billion, and that Chevron had demanded a re-engineering of the forecast.

Gorgon's costs have been impacted by currency fluctuations, logistical challenges stemming from operating on the Barrow Island A-grade nature reserve, and much lower than expected productivity.

Construction of the three-train venture, which will be capable of producing 15.6 million tonnes of LNG a year, is about 75 per cent complete.

Wheatstone, which will process Carnarvon Basin gas at an 8.9mtpa LNG plant near Onslow, is 25 per cent complete.

The Pilbara LNG developments are two of Chevron's most important future legacy assets and will contribute the equivalent of 400,000 barrels a day of oil a day to its group output.

"They will be substantial contributors to our cash flow for decades to come,” Chevron chairman John Watson said today.