Chevron Signs Second China LNG Deal as Gorgon Output Nears

  • ENN to get fuel from Australian project in initial pact
  • Gorgon venture due to start shipments early this year

Chevron Corp. signed its second agreement in as many months to sell liquefied natural gas to China as the U.S. company prepares to begin shipments from the $54 billion Gorgon project off northwest Australia.

Chevron plans to supply a unit of ENN Energy Holdings Ltd. with as much as 500,000 metric tons of LNG a year from Gorgon, the San Ramon, California-based company said. It follows Chevron’s initial agreement in late December to sell as much as 1 million tons of LNG a year to China Huadian Green Energy Co.

Gorgon, the largest resources project in Australian history, is getting ready to start exports as the Asian LNG market grapples with sliding energy prices and a supply glut. Chevron said last week that it expects shipments from the Gorgon venture on Barrow Island to begin early this year.

When the deal is finalized, the contract with ENN will last 10 years with deliveries starting in 2018 or the first half of 2019. The shipments would represent about 3 percent of Gorgon’s annual production capacity of 15.6 million tons. Royal Dutch Shell Plc and Exxon Mobil Corp. are among the partners in the development.

The China Huadian accord, which starts in 2020, will help Chevron commercialize its Australian gas holdings, the U.S. producer said last month. The company is also building the Wheatstone LNG venture in Australia, which will have an initial capacity of 8.9 million tons a year.

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