According to the latest Bloomberg report, Chevron Corporation has signalled the end of major new LNG projects in Western Australia and is unlikely to sanction an expansion of its Gorgon and Wheatstone export developments as it focuses on boosting returns from US$88 billion of investment.
The climate for developing large greenfield LNG projects has shifted to smaller developments given a slump in the price of oil to under US$50 a barrel.
Chevron’s two major Australian LNG facilities have suffered from cost blowouts, delays and poor timing. Oil’s worst slump in a generation and an LNG supply glut reduced revenue from projects across the industry.
While the third LNG train from the US$54 billion Gorgon project is in the process of starting up, further expansions are unlikely in the current climate with Chevron focusing future investments on shorter-term returns.
The first train from the US$34 billion Wheatstone project remains on schedule for mid-2017.
Approximately US$91 billion of LNG developments in Australia are scheduled to be completed in 2017 including Gorgon, Inpex Corp.’s Ichthys and Royal Dutch Shell Plc’s floating Prelude vessel.
A growing supply glut will likely deter significant investment in new Australian LNG projects beyond 2017 with doubts growing over the feasibility of planned floating facilities, according to the report. Planned FLNG projects in Australia including Woodside Ltd.’s Browse and Sunrise facilities and Exxon Mobil Corp.’s Scarborough may not proceed due to a more competitive operating environment.
Read the article online at: https://www.lngindustry.com/liquid-natural-gas/22032017/chevron-calls-an-end-to-lng-mega-project/