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Chevron's mega Australia gas project starts production
[SYDNEY] One of the world's largest natural gas plants and Australia's biggest resources project has started production, Chevron said Tuesday, as the market continues to battle plunging commodity prices and a supply glut.
The US multinational said the US$52 billion Gorgon liquefied natural gas (LNG) project off Australia's northwest coast, which has been hit by delays and cost overruns, was expected to ship its first cargo next week.
Australia has several other LNG plants in the pipeline and is predicted to overtake Qatar as the world's biggest natural gas producer by 2020.
The collapse in oil prices, which places pressure on the value of LNG, and an excess of supply has been hurting energy companies, but Chevron, the second-biggest US oil firm, said the "long-term fundamentals for LNG are attractive".
"We expect legacy assets such as Gorgon will drive long-term growth and create shareholder value for decades to come," Chevron's chairman and chief executive John Watson said in a statement.
"The long-term fundamentals for LNG are attractive, particularly in the Asia-Pacific region, and this is a significant milestone for all involved." The Gorgon asset was established as a joint venture with Shell and ExxonMobil, which each hold 25 per cent, and Japanese firms Osaka Gas (1.25 per cent), Tokyo Gas (1.0 per cent) and Chubu Electric Power (0.417 per cent).
Chevron owns 47.3 per cent of the venture.
The US firm, through projects like Gorgon, is trying to position itself as a major LNG supplier, particularly to the Asia-Pacific region, by 2020.
It also operates Wheatstone, one of Australia's largest resources projects in the Pilbara region of Western Australia.
Chevron in January joined some of the bigger global oil players in reporting a loss, of US$588 million, in the quarter ending December 31, 2015 amid falling prices.