Chevron Corporation (NYSE: CVX), along with its partners, approved a $29 billion LNG project in Australia. Chevron and its partners gave their nod to the construction of the Wheatstone gas-export project in Australia.
Although the global economic environment is currently uncertain, Chevron is betting on Asian demand for clean-burning fuels. The San Ramon, California-based company said that it plans to ship the first cargo of LNG from Wheatstone to Japanese customers in 2016. The company also said that the facility could double in size later to meet with Asia’s rising demand for clean-burning fuels.
In an interview with Dow Jones Newswire, Chevron Vice Chairman, George Kirkland, said that at this point the company has actually become slightly more bullish on gas demand coming out of Asia.
With the approval of the Wheatstone LNG project, global energy companies have now committed to spend more than $120 billion to develop natural gas reserves held off Australia’s northern coast. Australia has become a popular destination for investment as western companies continue to face difficulties in accessing resources in Iran and Persian Gulf. Shipping LNG to North Asia from Australia is also cheaper, compared with shipping from the Middle Easter and Africa.
But companies like Chevron could face problems such as rising wages in the future in Australia as the country continues to attract foreign investment. Chevron’s Kirkland noted that he didn’t see any major bottlenecks in Australia at the month even as the availability of skilled labor for the Wheatstone project remains a concern.
Chevron is planning to contract the Wheatstone LNG facility in phases, with a maximum annual output capacity of 25 million metric tons of LNG. The company will operate the facility and will have a 73.6% stake in the first phase of the project.
Chevron shares were marginally higher in pre-market trading today. At last check, the stock was trading 0.73% higher at $90.67 in pre-market trading. Chevron shares have fallen almost 8% in the last three trading sessions.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht. |