Replies to post #259 on The Rising Influence of Rising Affluence

[DewDiligence]

Map of Australia’s LNG Projects



Source: Reuters

[DewDiligence]

Chevron Inks $60B Deal for Gorgon LNG

[All three of the Gorgon project’s major equity holders (CVX, XOM, and RDS-A) have now found long-term buyers for all or most of their production. After today’s deal, the equity stakes in the project are CVX 47.75%, XOM 25%, RDS-A 25%, Osaka Gas 1.25%, and Tokyo Gas 1%. (Please see the map in #msg-40622622 for the project’s location.)]

http://www.reuters.com/article/marketsNews/idAFSYD30354220090910

›Thu Sep 10, 2009 5:25am EDT
By Fayen Wong

PERTH, Sept 10 (Reuters) - Chevron (CVX) has sealed an estimated A$70 billion ($60 billion) worth of gas deals with three North Asian buyers for its massive Gorgon project in Australia, paving the way for a final investment decision in coming weeks.

The $42-billion Gorgon project, awaiting final approval from Chevron and its partners, is expected to be given the go ahead by the middle of this month. [The formal go-ahead decision is now a fait accompli.]

The U.S. oil major said on Thursday it would sell Osaka Gas (9532.T) 1.375 million tonnes of LNG per annum (mtpa) over 25 years, and Tokyo Gas (9531.T) 1.1 million tonnes. GS Caltex in South Korea will buy 0.5 million tonnes for up to 20 years.

Chevron, which has an unfinalised sales agreement with Chubu Electric (9502.T) for 1.5 mtpa, still has about 3 mtpa of uncontracted gas from Gorgon and said it expects further LNG sales from the project in coming months.

"China will probably have an appetite for more LNG and South Korea's Kogas has also expressed interests in buying gas and taking equity in projects, so that's probably where the rest of Chevron's gas could go," said Stuart Baker, an energy analyst at Morgan Stanley.

Under the agreement, Chevron will also sell an equity share of 1.25 percent in the Gorgon project to Osaka Gas and another 1 percent to Tokyo Gas, reducing Chevron's stake to 47.75 percent.

Chevron did not disclose the financial details of the LNG and equity sales, but Australian Prime Minister Kevin Rudd said separately that Chevron's sales agreement would be worth more than A$70 billion ($60 billion) of exports over 25 years.

"This is a massive project that will deliver economic growth, income, jobs, prosperity for the nation for decades to come," Australian Prime Minister Kevin Rudd said.

Chevron's latest gas sales from Gorgon, which finalises agreements first reached in 2005, comes on the heels of a A$50 billion export deal inked by partner ExxonMobil Corp (XOM) with Chinese state-owned PetroChina last month, and brings total gas sales from the project to an estimated A$200 billion.

"The Gorgon LNG supply is likely to stay within Asia, and some of the deals are likely to be contracted to China to a greater degree, as well as Japan, South Korea, and India. Indonesian LNG production has been struggling a bit," said Chris Holmes, a consultant with Purvin & Gertz, in London.

The proposed 15 million tonnes per annum (mtpa) Gorgon project, which has seen years of delay amid environmental concerns, comprises three production trains and a gas plant for the domestic market. ExxonMobil and Royal Dutch Shell each holds a 25 percent stake in the project.

MARKET SATURATED?

With the Asia-Pacific region seeing around a dozen proposed LNG projects, many of which are racing to come onstream in the 2014-2015 timeframe, some analysts say the global LNG market was unlikely to be able to accommodate all these new capacities.

They said, projects that failed to secure buyers would be quickly deferred.

"A lot of operators have been very optimistic about an explosion of demand, but we hold a more conservative view that demand growth would be slower than expected," said an analyst who declined to be identified.

"If even four of five of the proposed projects around Australia get developed, that would bring more than enough supplies to meet demand," he said.

Gorgon, which will be underpinned by 40 trillion cubic feet of gas resources off western Australia, would be Australia's largest-ever resources development and is expected to create about 6,000 jobs at its peak and inject about A$33 billion ($28 billion) into the economy.

Chevron has not announced an estimated cost for the project, but Australian government officials have put it at about A$50 billion.‹

[DewDiligence]

Australia Sees Surging LNG Exports

[These are official government forecasts. See #msg-40906860 for a map of Australia’s LNG existing and planned facilities.]

http://www.reuters.com/article/idAFSGE6200GT20100302

›Mar 1, 2010
By Bruce Hextall

SYDNEY, March 2 (Reuters) - Australia on Tuesday forecast a dramatic surge in gas exports over the next six years, powered by strong Asian demand, in a bullish prediction that runs counter to fears that the global market is heading into oversupply.

The country's official commodities forecaster predicted that exports of liquefied natural gas (LNG) would nearly double by 2014/15 [!], with demand from China, India and other energy-hungry economies being fed by up to $200 billion in new Australian LNG projects.

The Australian Bureau of Agricultural and Resource Economics (ABARE), in its quarterly outlook, also gave upbeat long-range forecasts for iron ore, the country's second-largest export earner, with a forecast 68 percent jump in exports by 2014/15.

"The current situation is there seems to be ample supply on LNG markets but longer term demand looks very positive," Jammie Penm, ABARE's chief commodity analyst, told Reuters.

"China has an enormous appetite for LNG tonnes and also LNG seems to be the growing feedstock for energy generation."

Australia has about A$215 billion ($193 billion) worth of LNG projects in the pipeline, including A$65 billion already approved, though there have been concerns that some of these projects may never get built because of a global oversupply.

ABARE predicted LNG exports to race to 28 million tonnes a year by 2014/15 from 15 million tonnes in 2008/09, and iron ore exports to reach 546 million tonnes from 324 million as new investment by mining giants BHP Billiton <BHP.AX> and Rio Tinto <RIO.AX><RIO.L> and an army of prospectors reach peak levels.

AUSTRALIA BETTING ON GAS & IRON ORE

ABARE said expansion at Woodside Petroleum's <WPL.AX> Pluto project and Arrow Energy's <AOE.AX> Fisherman's Landing LNG development [#msg-zzz] would be key drivers in Australia's LNG export boom.

In 2014/15, Australia's LNG exports could see another sharp increase, as first production from Chevron's A$50 billion Gorgon project is due to come onstream with 15 million tonnes a year and coal-seam gas-based projects to add another 12 million a year.

Some energy analysts still see global oversupply around 2014 and 2015 as these new projects hit production, but expect demand to catch up again fairly quickly, thanks to Asian demand.

"There's risk of a supply glut between 2014 and 2015, so those projects that have secured customers are more likely to get off the drawing board," said analyst Nick Raffan of Fat Prophets.

"But beyond the 2015 timeframe, we could see a much tighter market that would bode well for some of these Australian projects."

Australia, which could replace Qatar as the world's largest LNG producer by the end of the next decade, remains very bullish on its booming gas export industry, with even the central bank predicting a commodities bull run of 20 years or more.

As many as six Australian LNG projects are rushing to be approved by 2010, including Woodside's Pluto second-train expansion and Inpex's <1605.T> Ichthys project.

The new projects also include three coal-seam gas developments on the east coast proposed by Santos <STO.AX>, BG Group <BG.L>, Origin Energy <ORG.AX> and ConocoPhillips <COP.N>.

THERMAL COAL & URANIUM SET TO BOOM

ABARE also forecast a 47 percent and 30 percent growth in thermal coal and uranium exports over the next six years, again reflecting strong Asian demand, but it made no major revisions to its near-term forecasts for the year to June 30.

In terms of the immediate horizon, ABARE cautioned that growth in OECD countries remained sluggish and any monetary tightening by China could also limit growth.

For farm production, ABARE predicted that the world's fourth largest wheat exporter would raise output by just over 1 percent in 2010/11 and could lift exports by 4 percent, despite weak grains prices, as drought conditions ease. It estimated that wheat output for the year to June 2011 would rise to 21.94 million tonnes from a downwardly revised 21.66 million tonnes in 2009/10.

"Prices have been falling because of large harvests around the world and large stocks," ABARE's Penm said.‹