Enlarge imageBy Rob Taylor and Fayen Wong
CANBERRA/PERTH (Reuters) - Chevron's
The approval brings Chevron and its partners, Royal Dutch Shell
Chevron said the decision will be made in coming months, once it secures approval from Australia's energy minister for production licences and development approval from the Western Australia state government.
Much of the production has already been sold to Asian customers. Earlier this month, ExxonMobil agreed to sell Chinese state-owned company PetroChina <0857.HK> <601857.SS> 2.25 million tonnes, worth $50 billion over 20 years, the biggest resources deal in Australia's history.
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That deal helped salve months of tense relations with China, Australia's biggest export market, strained by the arrest of an Australian Rio Tinto
As widely expected, the federal government approved the project on the Barrow Island nature reserve off west Australia, subject to conditions on managing and protecting local fauna, especially the endangered flatback turtle.
"Clearly I'm aware of the economic size of this proposal, but the specific matter I had to decide was whether or not this proposal would have an adverse affect, particularly on threatened or listed species," Environment Minister Peter Garrett told reporters in Canberra.
"I have determined that it won't."
Garrett added 28 new conditions, focussed on monitoring programmes on a number of species on the island to allay environmental concerns. But the World Wildlife Fund said Gorgon risks destroying the coral reefs around the island.
LNG EXPANSION
The proposed 15 million tonnes per annum (mtpa) project, which comprises three production trains and a gas plant, is expected to create 6,000 jobs at its peak and will underpin a massive expansion of Australia's total LNG production.
"The fact that Gorgon is going ahead reflects the strength of long-term gas demand. If you subscribe to the view of a carbon-constrained world, demand for gas will rise strongly because nuclear plants are too expensive and coal is dirty," said Gordon Ramsay, a Melbourne-based energy analyst at UBS.
With the Asia-Pacific region seeing around a dozen proposed LNG projects, of which many are racing to come onstream in the 2014-2015 timeframe, analysts say some may be forced onto the backburner if they can't sign up customers fast enough.
Still, longer-term LNG demand is expected to remain strong.
"The United States and Europe will be the strongest markets for LNG demand in the next few years. Come post-2015, LNG demand from China and India will pick up as they will build more terminals," said Tony Regan of Tri-Zen consultancy in Singapore.
Gorgon originally received government clearance for a two-train 10 mtpa project in late 2007 after a four-year approval process.
Faced with soaring construction costs at the time, the partners decided to scale the project up to 15 mtpa plus a gas plant, triggering a fresh round of environmental reviews and approvals.
Chevron has not yet announced an estimated cost for the expanded project, but Australian government officials have put the cost at about A$50 billion.
(Additional reporting by Felicia Loo in SINGAPORE and James Regan in SYDNEY)
