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Chevron Nabs Gorgon LNG Supply Contract with China's ENN

Chevron Corp.'s Australian subsidiaries and its partners have signed a nonbinding heads of agreement (HOA) to deliver up to 0.5 million metric tons/year (mmty) of liquefied natural gas (LNG) over a decade from the Gorgon project to China's ENN LNG Trading Co. Ltd.

Deliveries are scheduled to begin in 2018 or the first half of 2019.

"This is one more step in the development of our Australian gas business and our global LNG portfolio," said Chevron Executive Vice President Mike Wirth, who is in the Midstream and Development arm. "It also represents further progress with new LNG buyers in China who are poised to transform the LNG landscape in that country."

Gorgon is to include a three-train liquefaction facility with an annual capacity of about 15 mmty on Barrow Island off Western Australia's coast, as well as a domestic gas plant. The first phase of development was estimated in 2009 to cost $37 billion. Gorgon combines the development of the Gorgon field and the nearby Jansz-Io field.

Chevron Australia Managing Director Roy Krzywosinski said ENN's contract "shows the competitiveness of LNG supply from Chevron's Australian projects."

The Gorgon Project is a joint venture of the Australian subsidiaries of operator Chevron (47.3%), ExxonMobil Corp. (25%), Royal Dutch Shell plc (25%), as well as Japan's Osaka Gas (1.25%), Tokyo Gas (1%) and Chubu Electric Power (0.417%).

ENN LNG is a subsidiary of ENN Energy Holdings Ltd., one of the largest natural gas distribution companies in China. ENN Energy Holdings operates in 146 cities across 17 provinces and autonomous regions, with more than 11.3 million residential and 52,000 industrial/commercial customers. ENN’s Zhoushan LNG receiving terminal is under construction and expected to be in operation by 2018.

The final investment decision for Gorgon was made in 2009, and several agreements to supply gas already are set (see Daily GPI, Sept. 15, 2009;Dec. 9 2005). The HOA announcement Tuesday follows a similar agreement announced last month with China Huadian Green Energy Co. Ltd.

Chevron and its partners also are developing the Wheatstone Project in Australia as an LNG and domestic gas operation near Onslow, in the Pilbara region. The project's initial capacity is expected to be 8.9 mmty. Wheatstone was more than halfway completed early last year (see Daily GPI, March 10, 2015).

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