Jetty Contractor Says Chevron Owes Billions

     MARTINEZ, Calif. (CN) — An Australian company says Chevron’s financial problems and lower demand for liquefied natural gas led the energy giant to go cheap on a massive — and accursed — jetty project off the coast of Western Australia.
     The lawsuit was Courthouse News’ top download on Tuesday.
     CPB Contractors says in a lawsuit filed in Contra Costa County Superior Court that Chevron hasn’t paid the full cost of a 1.3-mile jetty to natural gas fields near Barrow Island, off the coast of Western Australia.
     CPB describes itself in its complaint as “an indirect subsidiary of one of the world’s leading international contractors in a variety of industries, including the natural gas industry.”
     In 2009, Chevron tapped CPB to be the main contractor for the project — known as the “Gorgon Project” — a jetty that would allow Chevron’s largest ships to dock in Barrow Island’s shallow waters in order to ship liquefied natural gas to Asia. The first problem, CPB says, is that the jetty would be constructed in an “A-class nature reserve, the highest level of conservation protection available in Australia” and would be “subject to unprecedented environmental requirements.”
     The jetty also represented “the single largest capital investment in the history of the Chevron US defendants since the company was founded in 1879,” according to CPB’s complaint.
     CPB says the contract was originally set at over $750 million, with over $540 million going to CPB.
     As work progressed, however, CPB says it submitted several change order requests for additional necessary work — all of which were rejected by Chevron.
     For instance, CPB says that in February 2012, Chevron’s agent in Australia rejected 96 percent of the cost of a single change order. The following month, the agent rejected 97 percent, CPB says.
     “The Chevron US defendants repeatedly engaged in wrongful and bad-faith conduct in connection with plaintiff’s efforts to complete a high-profile, extremely complex, international construction project governed by unprecedented environmental regulations and restrictions,” CPB says in its complaint, adding that Chevron “sought to undermine and frustrate plaintiff’s efforts to complete this enormous and highly complicated project on time and within budget.”
     Furthermore, Chevron’s agent repeatedly told CPB to do certain work on the jetty project and then refused to pay for the work it asked CPB to do.
     The project also faced problems from Mother Nature, including a five-month cyclone season on Barrow Island between November and April. At one point, winds reached 253 miles per hour — delaying the project and necessitating the evacuation of all personnel and vessels associated with the project.
     “Chevron JV is responsible for any delays or work downtime on the Gorgon Project as a result of a cyclone event,” CPB says in its complaint.
     “There were 10 separate cyclone events throughout the course of the Gorgon Project,” but Chevron refused to pay for any of the delays the storms caused, CPB says, adding that the cost of a single cyclone totaled $4.2 million.
     And then there was the mussel infestation.
     The discovery of the non-native, invasive Asian green mussel on several barges meant that Chevron imposed quarantine requirements for the vessels, dry-docking in Singapore for cleaning. Once again, CPB says, Chevron rejected 99 percent of the costs related to the quarantine.
     CPB also says other requests by Chevron, including a “one-day safety timeout,” revised procedures for the light vehicles on Barrow Island and a “five-day safety stand-down of all work on the Gorgon Project” went unpaid.
     “Due to the ongoing problems with the Gorgon Project, the final construction cost on the project will likely be well in excess of $54 billion, and nearing — if not surpassing — $20 billion more than the initial costs that the Chevron US defendants originally projected and authorized,” CPB says in its complaint.
     The contractor blames Chevron’s financial troubles, including “a staggering 76 percent decrease in overall earnings” between 2014 and 2015, for the reason why the energy giant won’t — or can’t — pay its bills.
     Chevron’s global media relations manager Kurt Glabitz told Courthouse News by email that “Chevron has received notice of the complaint, and we are currently reviewing the complaint.”
     CPB is suing for tortious interference with contract and breach of contract. The contractor seeks compensatory, general and punitive damages.
     It is represented by Robb Adkins of the San Francisco firm Winston & Strawn.

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