Chevron's decision to delegate a third party to negotiate key parts of its Gorgon LNG labour agreement, and its commitment to using the expensive Barrow Island, have meshed to create a cost monster.
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Comments PolicyNothing like senior management walking around the workers and seeing what problems can be overcome. The workers like it too (Unmasking the Gorgon cost monster, December 6).
Imagine the CEO turning up to a site and getting in amongst the workers.
It's been a revelation for me that (Unmasking the Gorgon cost monster, December 6):-
-OZ businesses outsource HR decisions to the local Chamber of Commerce
-The local Chamber of Commerce encourages uncompetitive work practices
Even when the commodity prices were high, it wouldnt justify this.
Mistakes were apparently made with earlier estimates of cost and special features of the project mean a very expensive investment applies (Unmasking the Gorgon cost monster, December 7). Nevertheless it really comes down to whether the project can be suitably profitable over the term or not. My understanding is that, despite the emerging threat of competition from USA recent uncertain developments this will be the case and lots of wealth will be created. Let's try to be positive for a change.
Add into all this mess the HS&E policy which stifles productivity to the point where it is difficult to complete a task, senior management no longer have control of the job. The quarantine issues are huge,for all their efforts to keep pests off the island the facts are that all through the dry season the south easterly winds blow from the mainland to the island and carry all sorts of insects and debris. Add to this the Island has been an oilfield since the early seventies with barges running to and fro over the intervening years with almost no qaurantine control of the cargos. Also, to blame the weather, ie, cyclones for holding up the project is just a smoke screen to the bigger issues on the Island.
Also they started construction work without the neccesary infrastructure on Barrow Island (Unmasking the Gorgon cost monster, December 6).
The existing freight port was drastically undersized as was the camp. This led to Contractors claiming EOT and cost variations against the Gorgon joint ventures.
I still wonder why the plant is on Barrow Island (no native title claimants perhaps, ergo no royalties). The island is only 100 odd km from the mainland, and the project already involved 100's of km of subsea pipelines.
Dear Mr Kohler,
Recent media regarding Resources construction productivity
I am writing to clarify inaccurate information published in two articles which featured in Business Spectator late last week: Miners must fess up on IR dirt, published December 5, 2012 and Unmasking the Gorgon cost monster, published December 6, 2012.
Both articles featured inaccurate assertions about the role of the Chamber of Commerce and Industry of WA (CCI) during industrial relations agreement negotiations for the Wheatstone and Gorgon projects.
In the December 6 article, Mr Gottliebsen states Chevron used a local chamber of commerce to undertake their labour arrangement for the Gorgon Project. CCI had no involvement in the negotiation of industrial agreements of the Gorgon Project. We began engaging with the Gorgon Project in the second half of 2010 and were only formally engaged to provide support to contractors by Kellogg Joint Venture Gorgon in the second half of 2012.
In regards to December 5 article, Mr Gottliebsen claims no contractors were involved in the development and negotiation of those base terms and conditions. The correct information is that the Wheatstone Agreements were negotiated by the first significant contractor with assistance from CCI and input from Bechtel (the engineer).
The CCI Construction Services Guide Mr Gottliebsen refers to provides clients with information on the current market wages and conditions in specific areas. This is to ensure contractors are aware of the costs involved to hire and retain skilled workers, often in remote locations. These are guides only, with wages and conditions ultimately set by the individual companies and not CCI.
Major resource industry construction projects are high cost and complex for the most experienced players, let alone new entrants. For 30 years we have worked with industry to foster a productive working environment by proactively providing employment relations advice that has helped companies invest billions of dollars in to the Australian economy.
Kind Regards,
Lindsay O’Sullivan
Chief Officer – Business Services
Chamber of Commerce and Industry of WA