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Exxon Says $42 Billion Gorgon Decision May Come Within a Month

By Ben Sharples

Aug. 28 (Bloomberg) — Exxon Mobil Corp., a partner in Chevron Corp.’s A$50 billion ($42 billion) Gorgon liquefied natural gas project in Australia, says a final development decision on the venture may be made within the next month.

Once in operation, Gorgon would produce gas for at least 60 years, Exxon Mobil Australia Chairman John Dashwood said in Melbourne today. The Australian government this week granted environmental approval for the venture, the country’s largest resources project.

The partners will take a final decision on investment once they have production licenses and development approvals, Nicole Hodgson, Perth-based spokeswoman for Chevron said Aug. 26. Gorgon, which includes Royal Dutch Shell Plc, has contracts to supply the fuel to China, India and Japan and is among more than 12 LNG projects in the region competing for Asian buyers.

“We’ll see global growth come back on again and with that Asian demand LNG will move forward strongly,” John Young, an analyst at Wilson HTM Investment Group in Melbourne said by phone. “There are buyers out there for LNG and I think the market is going to be reasonably healthy.”

Gorgon, operated and 50 percent-owned by Chevron, will have capacity to produce 15 million metric tons of LNG a year, with first shipments expected in 2014. The venture has accords to supply the fuel to PetroChina Co., Petronet LNG Ltd., Tokyo Gas Co., Osaka Gas Co., and Chubu Electric Power Co.

LNG is natural gas that has been chilled to liquid form, reducing it to one-six-hundredth of its original volume at minus 161 degrees Celsius (minus 259 Fahrenheit), for transportation by ship to destinations not connected by pipeline. On arrival, it’s turned back into gas for distribution to power plants, factories and households.

Exxon is discussing plans to develop the Scarborough gas field in the Carnavon Basin, 300 kilometers off the Western Australian coast, Dashwood said. The project is a joint venture with BHP Billiton Ltd.

“We’re looking to figure out what the development concept is to allow us to commercialize it,” Dashwood said.

To contact the reporter on this story: Ben Sharples in Melbourne at [email protected]

Last Updated: August 28, 2009 01:58 EDT

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