Chevron's (CVX) Production At Gorgon Plant To Resume Soon

Leading integrated energy player Chevron Corporation (NYSE:CVX) declared that it will soon restart production from its Gorgon liquefied natural gas (LNG) development in offshore Australia. The company has already commenced start-up activities at the plant and it expects to be ready to ship its third LNG cargo very soon. Work at the facility was stopped following a gas leakage nearly two weeks ago.

It is to be noted that Chevron had halted production at its $54 billion project for the very first time in Apr 2016 owing to technical problems. Despite the suspension of production for the second time in the beginning of July, Chevron had sufficient capacity of gas to ship its second LNG cargo on Jul 3.

However, Chevron could not ship its third LNG cargo in the second week of this month on the Asia Excellence tanker. The vessel is presently anchored approximately 100 kilometers away from the company’s LNG plant, along with the Asia Endeavour, another of Gorgon’s project vessels.

Chevron is the operator of the Gorgon LNG project with a 47.3% equity holding. Exxon Mobil Corporation (NYSE:XOM) – the largest U.S. oil company by market value – and Royal Dutch Shell (LON:RDSa) plc RDS.A have a 25% stake each in the development. The remaining stake is held by Osaka Gas, Tokyo Gas and Chubu Electric Power.

The Gorgon LNG development holds the key to Chevron becoming one of the largest LNG suppliers in the world over the next four years. In fact, once the Gorgon project is completed, 15.6 million metric tons of LNG will likely be produced every year from the three production lines. The development is also expected to generate sufficient natural gas to provide electricity to 2.5 million homes in Australia.

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San Ramon, CA-based Chevron is one of the largest publicly traded oil and gas companies in the world, based on proved reserves. It is engaged in oil and gas exploration and production, refining and marketing of petroleum products, manufacturing of chemicals, and other energy-related businesses.

The company currently holds a Zacks Rank #2 (Buy), implying that it will outperform the broader U.S. equity market over the next one to three months.

Another well-ranked player in the same sector is Sasol Limited (NYSE:SSL) , which sports a Zacks Rank #1 (Strong Buy).