* Chevron's Gorgon LNG project faces stringent conditions
* Approval paves way for final investment decision
* Chevron says on track to sell its share of uncontracted
* Chevron says targets first production in 2014
(Adds details and comments from Chevron)
By Fayen Wong
PERTH, April 30 Chevron Corp (CVX.N) on
Thursday won conditional approval from an Australian
environmental regular for the multi-billion dollar Gorgon gas
project, bringing a final investment decision closer.
The Environmental Protection Agency (EPA) of Western
Australia said that although it was still opposed to the
building of the Gorgon liquefied natural gas (LNG) facility on
a nature reserve, the plan could pass with strict conditions.
"The EPA considers that the current proposal could only
meet the EPA's environmental objectives if, and only if,
stringent conditions were applied to it," the agency said.
The recommendations are subject to a two-week public appeal
process, after which the state government will make a final
decision on whether to allow the project and on any conditions
to be imposed.
The U.S. oil major, partnered with Royal Dutch Shell Plc
(RDSa.L) and Exxon Mobil Corp (XOM.N), wants to increase the
size of Gorgon to 15 million tonnes per annum (mtpa), after
having received state approval for a 10 mtpa project in 2007.
EPA approval clears one of the key regulatory hurdles and
paves the way for Chevron to make a final investment decision
on the project, which the Western Australian government has
estimated would cost about A$50 billion ($35 billion).
Chevron said in a separate statement that it was working
towards a final investment decision in the second half of this
In an interview with Reuters, Chevron Australia's Gorgon
General Manager Colin Beckett said first LNG cargoes are
expected in 2014, confirming several years of speculation that
production would be far delayed from the original 2010-2011
Beckett declined to forecast the project's cost, saying the
venture is in the process of seeking and assessing bids for
"We're getting contractors to update their costs with 2009
prices. This is to make sure we'll get the best prices and take
advantage of lower construction costs in this downturn," he
Chevron has for several years avoided committing to a final
investment target date for Gorgon, after saying in 2006 that it
was not likely that year. Chevron's most recent cost update for
Gorgon of A$11 billion was given five years ago.
Chevron, which owns 50 percent of Gorgon, said it may
expand Gorgon to 25 mtpa in the future and that it was
continuing to talk to a range of potential LNG customers for
its share of uncontracted gas of about 3 mtpa.
When asked about potential regions Chevron was eyeing to
sell the Gorgon gas, Beckett said: "Asia is obviously the most
promising market and one that is the most buoyant."
Environmental concerns centre on the potential damage to a
protected nature reserve on Barrow Island, the site of the
proposed plant to process estimated gas reserves of 40 trillion
cubic feet, around a quarter of Australia's known gas.
The EPA said the impact on flatback turtle nesting on the
island, introduction of non-indigenous species to the island's
ecosystem, and the potential damage inflicted by seabed
dredging would need to be managed and closely monitored.
The agency has made its recommendations to Western
Australian Environment Minister Donna Faragher.
($1=1.424 Australian Dollar)
(Reporting by Fayen Wong)