Chevron Plans to Sell More Gas From A$52 Billion Gorgon Project

Chevron Corp. (CVX), the second-largest U.S. oil company, said it’s in talks with customers to sell more liquefied natural gas from its Gorgon project in Australia and to boost the amount sold under long-term contracts.

Chevron wants to have as much as 85 percent of its share of LNG from the Gorgon development in Australia under long-term contracts, compared with 65 percent now, Australia Managing Director Roy Krzywosinski told reporters today in Brisbane, where he’s attending an industry conference.

“We’re in active discussions with customers,” Krzywosinski said. “The closer we get to first LNG the more valuable the volumes are going to be. We’re confident we’re going to be able to market those incremental volumes.”

The cost of Chevron’s Gorgon LNG development, the largest resources project in Australia’s history, jumped 21 percent to A$52 billion ($50 billion) on local currency gains and higher labor expenses, the company said in December. The A$29 billion Wheatstone LNG project in Australia is on budget and schedule, the San Ramon, California-based company said.

Chevron expects to enter the front-end engineering and design phase of a proposed Gorgon expansion with a fourth processing unit at the end of the year, he said.

“We have the gas,” he said. “We have the alignment. It’s just a matter of seeing where this investment climate settles.”

Gorgon, located on the Barrow Island nature reserve off the northwest coast, is expected to deliver its first liquefied natural gas cargoes between January and March of 2015 after the LNG plant starts in late 2014, Chevron said in December.

To contact the reporter on this story: James Paton in Sydney at jpaton4@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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