Chevron Corp.’s Angola LNG (liquefied natural gas) liquefaction project in southern Africa is speeding toward first cargo some time during the second quarter. While capacity contracting has long been under way on the company’s Gorgon and Wheatstone LNG projects in Australia, not so with Angola LNG, which was conceived years ago as an LNG supplier to the United States.

“Angola LNG was predicated on sales to the U.S. market, actually to be delivering gas to Pascagoula [MS] to an LNG receiving terminal there,” Chevron’s George Kirkland, executive vice president of upstream and gas, said at the company’s analyst day Tuesday when asked about Angola LNG contracting.

“It really makes absolutely no sense to deliver any more gas to the United States at this point in time. We’ve reached agreement almost to the final level in Angola to allow us to redirect that gas to the best markets in the world. What we anticipate is that we will take that gas to Europe or to Asia. We’ve got the ships that allow us to do that as a part of that project, so we will move that gas to other markets around the world. It’s in all partners’ and governments’ vested interest to move that gas somewhere else, and that’s my expectation that we will be doing that.”

As recently as last spring at least some analysts were still expecting Angola LNG cargoes to come to the U.S. Gulf Coast (see Daily GPI, May 19, 2011). Back in 2007, the first Angola LNG cargo was expected to arrive at the Pascagoula terminal some time in 2011 (see Daily GPI, Dec. 11, 2007).

All of Angola LNG’s systems are mechanically complete and final commissioning activities are under way, Kirkland said. The gas that will feed the Angola LNG facility will come from a region south of the Congo Canyon; the project also will take gas from Chevron production north of the Congo Canyon, Kirkland said Tuesday. The majority of the gas is associated with oil production and is expected to be “hot” or have a high Btu content.

“That gas is very rich. It’s got a lot of liquids content,” Kirkland said, adding that the company wants to get some “run time” on the plant while it lines up longer-term markets for the LNG and works out contractual issues.

Meanwhile, Chevron has completed about 40% of its huge Gorgon LNG project and expects it to be online in 2014. The $29 billion Wheatstone LNG project was sanctioned last September, and more than $13 billion worth of construction contracts have been awarded. The projects are to supply Asian and Australian markets.

According to Kirkland, about 70% of Chevron’s equity LNG from Gorgon has been sold under long-term contracts, and that figure is expected to hit 85-90% by the time the project starts up. As for Wheatstone, about 60% of equity LNG has been sold under long-term contracts, he said.

Chevron CEO John Watson said “we feel very good about the [LNG] contracts that we have.” He said he expects Asian LNG contracts to continue to link the commodity’s price to that of oil as LNG is a replacement fuel for oil and other energy sources, unlike in the United States where there is gas-on-gas competition.

During the next couple of years, Chevron will spend heavily in the Asia-Pacific region, thanks to Gorgon and Wheatstone, said CFO Pat Yarrington. Kirkland said 2012 and 2013 will be peak years for Chevron LNG investment.

The LNG projects are seen as significant components of Chevron’s previously announced goal to grow oil and gas production by more than 20%, to 3.3 million boe/d, between now and 2017 (see Daily GPI, Dec. 12, 2011).

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