CIMIC’s $2b Gor­gon jetty dis­pute set to run and run

Pilbara News - - News - Peter Williams

Con­trac­tor CIMIC Group’s $2 bil­lion-plus claim against oil and gas gi­ant Chevron over the Gor­gon LNG project is set to drag on for at least two more years.

CIMIC’s half-year re­port last week said ar­bi­tra­tors had made or­ders for hear­ings regarding a blowout in the project’s jetty con­struc­tion to be held in 2019.

It said the ar­bi­tra­tion since De­cem­ber had con­tin­ued in ac­cor­dance with con­trac­tual terms.

CIMIC is­sued a no­tice of dis­pute to Chevron in Fe­bru­ary last year claim­ing $1.86 bil­lion, plus $500 mil­lion in in­ter­est and costs.

The ar­bi­tra­tion came af­ter a pe­riod of ne­go­ti­a­tions. The Span­ish-con­trolled com­pany has a $1.15 bil­lion con­tract debt — about 50 per cent of the to­tal claim — recorded in its ac­counts in re­la­tion to the Gor­gon jetty, re­flect­ing costs in­curred un­der ac­count­ing stan­dards.

The 2.1km jetty at the $US54 bil­lion Bar­row Is­land project in the Pil­bara was com­pleted by CIMIC and Ital­ian en­gi­neer­ing com­pany Saipem in 2014.

The con­tract’s value in­creased from $900 mil­lion in 2009 to an agreed fig­ure of $1.85 bil­lion in 2012.

CIMIC has a sep­a­rate le­gal ac­tion in the US against Chevron and en­gi­neer­ing com­pany KBR, a mem­ber of the con­sor­tium which man­aged Gor­gon’s con­struc­tion.

In that law­suit, CIMIC sub­sidiary CPB Con­trac­tors has ac­cused the oil and gas gi­ant of poor con­duct and re­peated re­fusals to pay for work it had com­mis­sioned.

It de­tails claims of the ex­pen­sive and un­paid im­pact of 10 cy­clones, as well as en­vi­ron­men­tal and safety mea­sures. CIMIC re­ported a 22 per cent rise in half-year net profit to $323 mil­lion. Rev­enue was up 28 per cent to $6.3 bil­lion.

The in­terim div­i­dend of 60¢ a share was up 25 per cent from a year ear­lier.

The com­pany reaf­firmed guid­ance of an an­nual net profit for the cal­en­dar year of $640 mil­lion to $700 mil­lion, sub­ject to mar­ket con­di­tions.

“The com­pelling num­bers we re­ported to­day are a tes­ta­ment, not only to the trans­for­ma­tion of our busi­ness model which we com­menced in 2014 but also to the on­go­ing drive of our peo­ple to im­prove, in­no­vate and grow,” ex­ec­u­tive chair­man Marcelino Fer­nan­dez Verdes said.

The 2.1km jetty at the Bar­row Is­land project.

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