Chevron Corp.’s (IW 500/2) $54 billion Gorgon liquefied natural gas project, the largest resource development in Australia’s history, has started producing the super-cooled fuel.
The LNG project, whose partners include Royal Dutch Shell Plc (IW 1000/2) and Exxon Mobil Corp. (IW 50/1), is due to ship its first cargo next week, San Ramon, Calif.-based Chevron said. The development is located on the Barrow Island nature reserve off northwest Australia.
Gorgon is starting as weaker oil prices threaten revenue projections for LNG export developments, which typically have long-term sales contracts tied to the value of crude. The Australian project will add to a wave of new supply, including the first deliveries from the U.S., as demand in Asia slows.
The project’s cost ballooned from an estimate of $37 billion when the companies decided to go ahead with the venture in 2009.
Australia is forecast to overtake Qatar in 2018 to become the world’s largest LNG exporter, according to the Australian Petroleum Production & Exploration Association. At the end of the decade, Australia will have 10 gas-export projects producing more than 85 million metric tons a year of LNG, it said.