Chevron Prepares To Resume $54B Worth Gorgon LNG Project

Chevron Corporation (NYSE:CVX) , one of the largest integrated energy companies in the world, declared that it has started preparation to resume its Gorgon liquefied natural gas (LNG) development.

The $54-billion worth LNG project – located off the coast of Australia – was shut down last month due to technical problems. Before that on Mar 7, the company commenced the production of LNG and condensate from the massive Gorgon project. In March, the company also sent sent the first liquefied natural gas (LNG) cargo to a Japanese customer from the project.

It is to be noted that the development holds the key to Chevron's becoming one of the largest LNG suppliers globally over the next four years. Notably, 15.6 million metric tons of LNG will likely be produced every year from the three production lines once the Gorgon project is completed. The development is also expected to generate sufficient natural gas that will be able to provide electricity to 2.5 million homes in Australia. The development is also expected to produce sufficient natural gas that will help in generating electricity for 2.5 million homes in Australia.

Most importantly, Chevron foresees the fundamentals of LNG to be favorable in the long run and revealed that there is growing need for natural gas specifically in the Asia-Pacific area. The company believes that Gorgon LNG, which will help Australia to become the largest exporter of LNG worldwide in a few years by edging out Qatar, will serve this huge demand for several decades.

Investors should know that the Gorgon and Jansz-Io fields supply gas to the Gorgon project. Chevron is the operator of the development with a 47.3% ownership. 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.

San Ramon, CA-based Chevron currently carries a Zacks Rank #3 (Hold), implying that it will perform in line with the broader U.S. equity market over the next one to three months.

A better-ranked stock in the energy sector is PetroChina Co. Ltd. (NYSE:PTR) , sporting a Zacks Rank #1 (Strong Buy).


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