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  • bongo.drum Jan 2, 2013 8:49 AM Flag

    Wake up, dreamers

    Chevron's Canada foray may take priority over Australian LNG projects

    BY: MATT CHAMBERS From: The Australian December 31, 2012 12:00AM

    Source: The Australian

    US energy giant Chevron, which is bankrolling more Australian LNG projects than any other company, has moved into the North American gas export sector, taking charge of a $US15 billion ($14.5bn) Canadian project that may take priority over the company's flagged Australian expansions.

    Chevron's $US1bn move to take a 50 per cent stake in and operate the yet to be approved Kitimat LNG project in British Columbia comes after BG Group last year took a stake in the Sabine Pass export project in Louisiana.

    Sabine Pass quickly overtook an expansion of the under-construction $US20bn Queensland Curtis LNG plant to become BG's main LNG expansion priority, leaving the inflation-hit Queensland project unlikely to be expanded soon.

    Chevron's deal, which was announced in the US over Christmas, comes as cheap North American gas, driven by a revolution in shale extraction, turns the region from an LNG importer to an exporter.

    It also comes as Australia's reputation as the most expensive place in the world to build LNG projects continues to grow amid rising labour costs and a high Australian dollar.

    Earlier this month, Chevron announced a $9bn cost blowout at the Gorgon project, now estimated to cost $52bn. It is also yet to announce a front-end engineering and design (FEED) study on a $10bn expansion of Gorgon.

    There has been no indication from Chevron that Kitimat will diminish the chances of expansion of Gorgon or its other LNG venture, the $29bn Wheatstone project.

    But the addition of Kitimat to Chevron's list of LNG options will, at the least, provide internal competition for billions of LNG dollars that could be spent on expansion here....

    Sentiment: Strong Sell

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