Chevron starts second production unit at Wheatstone LNG in Australia

FILE PHOTO: The logo of Chevron (CVX) is seen in Los Angeles, California, United States, April 12, 2016. REUTERS/Lucy Nicholson/File Photo

MELBOURNE (Reuters) - Chevron Corp has started producing liquefied natural gas (LNG) at the second unit of its $34 billion Wheatstone development, marking the completion of its two megaprojects in Australia after cost-blowouts and delays.

Wheatstone Train 2 is the last of five LNG production units built by Chevron in the state of Western Australia over the past decade at a combined cost of $88 billion.

“With the Chevron-operated Wheatstone and Gorgon LNG facilities now operational, we are delivering a significant new source of energy for customers in the region,” Chevron Australia Managing Director Nigel Hearne said in a statement on Friday.

Wheatstone LNG, with a total capacity of 8.9 million tonnes a year, is the eighth LNG project to be completed in Australia. That puts the nation on track to challenge Qatar as the world’s biggest LNG exporter when the two remaining ongoing projects - Inpex Corp’s Ichthys and Royal Dutch Shell’s Prelude floating LNG - are finished.

At full capacity, Wheatstone is expected to make up about 6 percent of the Asia Pacific region’s LNG production, Chevron said.

The first cargo from Wheatstone was shipped from Train 1 in October, 2017, a few months behind target, following hiccups in the start-up of Chevron’s $54 billion Gorgon project, which slowed work on Wheatstone.

Its partners in Wheatstone are Kuwait Foreign Petroleum Exploration Company (KUFPEC), Australia’s Woodside Petroleum, Kyushu Electric Power Co, and a joint venture part-owned by the world’s top LNG buyer, Japan’s JERA.

For Woodside, Wheatstone’s ramp up is key to achieving targeted annual production of around 100 million barrels of oil equivalent in 2020.

Reporting by Sonali Paul; Editing by Joseph Radford