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Gorgon to Get Official Go-Ahead From Chevron Next Week, FT Says

Bloomberg

By Jason Scott

Sept. 11 (Bloomberg) — Chevron Corp. will next week give the official go-ahead to the Gorgon liquefied natural gas project in Australia, the Financial Times reported, without saying where it got the information.

Chevron will approve an investment of about A$42 billion ($36 billion) in the venture off Western Australia, the FT said. State Premier Colin Barnett has said the project will cost A$50 billion. Chevron and partners Exxon Mobil Corp. and Royal Dutch Shell Plc haven’t given a figure.

LNG sales from Australia’s biggest resources project may reach A$300 billion over its first 20 years, Prime Minister Kevin Rudd has said. Chevron yesterday completed supply agreements with Tokyo Gas Co., Osaka Gas Co. and South Korea’s GS Caltex Corp. that Rudd valued at A$70 billion. The Japanese companies have agreed to buy a combined 2.25 percent stake in Gorgon.

Chevron’s Perth-based spokesman, Guy Houston, declined to give a date for the announcement today. He referred to comments by the head of the company’s Australian unit, Roy Krzywosinski, on Sept. 1 that a final decision would be made in “just a matter of weeks.”

Exxon has signed a contract to supply gas from its share of Gorgon output to PetroChina Co. valued by the Australian government at A$50 billion, and will sell the rest of its share to India’s Petronet LNG Ltd.

San Ramon, California-based Chevron currently owns 50 percent of the project and has the right to sell half of its 15 million metric-tons-a-year production. Exxon and Shell each own 25 percent.

Australia’s LNG Advance

Gorgon is among more than 12 proposed LNG projects in Australia and Papua New Guinea competing to tap a forecast increase in demand in north Asia for cleaner-burning fuels. Australia may jump to first or second among global LNG producers within 10 years, Joseph Marushack, president of ConocoPhillips’ local unit, said in Darwin yesterday.

Australia, the world’s sixth-biggest LNG supplier last year according to BP Plc’s 2009 energy review, and Papua New Guinea will boost output of LNG to as much as 100 million metric tons from about 20 million tons to together become the world’s biggest LNG producer, Bernstein analyst Neil Beveridge said in a report dated Sept. 9. That would require an investment of about $100 billion, he said.

To contact the reporter on this story: Jason Scott in Perth at [email protected];

Last Updated: September 10, 2009 23:57 EDT

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