AUSTRALIAN LNG: TO JAPAN
Chevron Corp. has shipped its first cargo of liquefied natural gas from its new multibillion-dollar plant off Australia's west coast to a customer in Japan, the U.S. energy company said Monday.
The first export is a significant milestone for the Gorgon project, which has been hit by delays and a jump in costs since construction started, as it begins generating revenue for Chevron and its partners.
"Asia Excellence," one of several new LNG carriers that Chevron is adding to its fleet, departed the Gorgon gas facility on remote Barrow Island off northwestern Australia, Chevron said. Its cargo will be delivered to Chubu Electric Power, one of the foundation buyers lined up for the project.
The US$54 billion project, a cornerstone in Chevron's efforts to become a major LNG supplier, began production of LNG two weeks ago. It is one of the world's biggest new LNG operations and represents the single largest investment in Australia by a private company or government. When completed, three production lines will produce 15.6 million metric tons of LNG a year plus enough gas to generate electricity for 2.5 million Australian homes at full capacity.
The initial cargo was a key step in Chevron becoming a reliable LNG provider to customers in the Asia-Pacific region from a project expected to operate for decades to come, Mike Wirth, the company's vice president for midstream operations and development, said.
Natural gas for Gorgon comes from two fields between 130 and 220 kilometers off the coast of Western Australia state. The gas is cooled to a liquid, making it easier to store and ship, at the plant on Barrow Island and then off loaded via a 2.1 kilometer long jetty for shipment to international markets.
The price tag for Gorgon ballooned by about 45% since Chevron and its partners made the decision to invest in 2009, due to delays, higher labor costs and a jump in the value of the Australian currency against the dollar. Chevron is operator and majority owner of Gorgon, with Exxon Mobil Corp. and Royal Dutch Shell PLC each holding 25% stakes. Osaka Gas, Tokyo Gas and Chubu Electric each have minor interests.
Earlier this month, Chevron said world-wide demand for gas was growing at twice the rate of oil and it continued to see opportunities for LNG sales. As it stands, the company on Monday reiterated that more than 80% its share of LNG from Gorgon and its neighboring Wheatstone project, which is due to begin producing mid-2017, is covered by long-term sales deals with customers in the Asia-Pacific region. At the same time, as construction winds down the company has forecast spending on Gorgon and Wheatstone will decline from about US$8 billion this year to less than US$1 billion in 2017.
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