* Australia government gives Wheatstone environmental go ahead
* First phase of Wheatstone to include 8.9 mpta LNG plant, domestic gas plant (Recasts, adds government, Chevron comments, details)
By Rebekah Kebede
PERTH, Sep 22 (Reuters) - Chevron Corp is expected to make a final investment decision on its $25 billion Wheatstone liquefied natural gas project in Western Australia on Monday, a source close to the decision said on Thursday.
Australia’s government cleared the path for the company’s approval when it gave environmental clearance to the 8.9 million tonne per annum Wheatstone project on Thursday. Local media had also reported that a formal announcement was expected by Monday.
“The federal environmental approval is an important milestone in reaching the final investment decision for the Wheatstone Project this year,” George Kirkland, vice chairman of Chevron Corporation, said in a statement.
Chevron received federal environmental approval for a 25 million tonne per annum (mtpa) LNG plant as well as a domestic gas plant. The first phase of the Wheatstone project will have a of 8.9 million tonnes per annum of LNG and a domestic gas plant.
Australia’s government attached more than 70 conditions to the approval of Wheatstone to limit the impact on the environment in the area.
“While I have considered the social and economic implications of this project, my focus has been on protecting environmental matters of national significance through strict conditions to manage any potential environmental impacts,” Environment Minister Tony Burke said in a statement.
Chevron is positioning itself to become one of the largest LNG producers in Australia, with the construction of the $37 billion Gorgon project, also off the coast of Western Australia, which is set to produce 15 mtpa by 2014.
Although they will be some of the largest, Wheatstone and Gorgon are just two of many Australian LNG projects in the pipeline.
The country currently has around A$200 billion of LNG export projects on the drawing board, and the industry is eyeing a production goal of 60 million tonnes per annum (mtpa) by 2020, triple current production levels of around 20 mtpa.
Wheatstone will likely face stiff competition from other LNG projects for labour and resources, a situation which analysts have said could cause project delays and cost blowouts across the industry.
The latest to face a significant delay was Woodside Petroleum’s Pluto project which in June reported an almost $1 billion cost hike and trimmed its overall production guidance at its flagship Pluto LNG project in Australia.
Contractors for the Gorgon project have also warned of delays to the project, but Chevron has repeatedly said the project is on time and on budget.
Chevron has agreed to several supply deals in recent months, including with Tokyo Electric Power (TEPCO) for 3.1 mtpa and Kyushu Electric Power for 0.8 mtpa.
The company also has a preliminary supply deal with Korea Gas Corp (KOGAS) for 1.95 mtpa.
Apache Corporation , Kuwait Foreign Petroleum Exploration Company (KUFPEC), Royal Dutch Shell RSDa.L, and Kyushu Electric are all equity participants in Wheatstone, and hold 13 percent, 7 percent, 6.4 percent and 1.83 percent, respectively while Chevron holds the rest.
KOGAS has signed a heads of agreement to acquire 5 percent interest in the project. (Additional reporting by Rob Taylor in Canberra; Editing by Ed Davies and Miral Fahmy)