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Financial Times: Chevron to develop second LNG hub next to Woodside field

By Raphael Minder in Bangkok
Published: March 11 2008 02:00 | Last updated: March 11 2008 02:00

Chevron, the US oil and gas company, said yesterday it would develop a second liquefied natural gas (LNG) hub in Australia, adding to its Gorgon venture and rivalling a neighbouring project owned by Woodside Petroleum, the Australian producer.

The US energy company said it was studying where along the coast of Western Australia to build a gas plant, which would be capable of producing 5m tonnes of gas per year from Wheatstone – a gas field next to Woodside’s Pluto project.

Executives said that, after considering other options for Wheatstone, including feeding into Pluto, Chevron had come to the conclusion that it was better off investing in and developing a new, multi-billion dollar project.

“The natural home for gas coming out of Australia will be in this part of the world,” said John Gass, president of Chevron’s global gas unit.

The Gorgon gas field is still likely to dwarf any development of Wheatstone, but Gorgon has been hit by delays linked to environmental concerns as well as rising construction costs. Chevron shares ownership of Gorgon with Royal Dutch/Shell and ExxonMobil, but it owns 100 per cent of Wheatstone.

Chevron executives insis-ted yesterday the three Gorgon partners remained “fully aligned” over how to proceed there and that Chevron’s new focus on Wheatstone would not alter its commitment to Gorgon.

“We already have enough resources to underpin both Wheatstone and Gorgon . . . Now is the time to move things forward for both,” said Jim Blackwell, president of Chevron Asia Pacific for exploration and production. Chevron also said yesterday it would expand its Platong gas project in Thailand, starting in 2011 and at a total cost to Chevron and its partners of $3.1bn.

Asia has become the biggest market for LNG, which is growing at about twice the rate of the overall market but has been reined in by shortages that have helped push the price of gas.

ExxonMobil forecast yesterday that worldwide LNG capacity would grow by 400 per cent by 2030 to help meet an expected five-fold rise in demand in a similar timeframe, from 100m tonnes in 2000 to more than 500m tonnes in 2030.

Oil companies have moved aggressively into gas as state-owned oil companies block them from the 80 per cent of the world’s oil reserves under their control. A report by PFC Energy, the consultancy, noted that the supermajors’ average gas share of total reserves grew from 39.5 per cent in 2003 to 44 per cent in 2006.

Additional reporting by Sheila McNulty in Houston

Copyright The Financial Times Limited 2008

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