The West Australian Environmental Protection Authority has granted conditional approval to U.S. energy behemoth Chevron Corp’s (CVX) proposed Wheatstone liquefied natural gas ("LNG") venture near Onslow on the Pilbara coast.
The decision – the first of a number of environmental reviews and approvals that Chevron will need to bring the project online – is subject to stringent conditions on managing and protecting the local environment.
Chevron holds a 73.6% operated interest in the $25 billion Wheatstone development, with the other partners being Apache Corp. (APA), Kuwait Foreign Petroleum Exploration Co. (“KUFPEC”) and Royal Dutch Shell plc (RDS.A).
The state environmental nod to one of Australia's single largest natural resources project – which still requires approval from the federal environment ministry – paves the way for a final investment decision by the Wheatstone joint venture participants, once they get the nod for production licenses and construction plans.
The Wheatstone gas fields, off the coast of Western Australia, are estimated to contain 4.5 trillion cubic feet of gas deposits. Chevron said that the venture will have an initial annual capacity to produce 8.9 million metric tons of LNG, with the first shipment expected in 2016.
The business environment for LNG remains robust, with demand likely to grow at around 8% − 10% annually over the next few years in all major markets. The Wheatstone project provides Chevron and its partners an attractive strategic position for serving the fast-growing economies of China and India, plus other Asian countries.
San Ramon, California-based Chevron is one of the largest publicly traded oil and gas firms in the world, based on proved reserves. It is engaged in oil and gas exploration and production, refining and marketing of petroleum products, manufacturing of chemicals and other energy-related businesses.
Chevron is currently rated as Zacks #3 Rank (Hold), implying that the stock is expected to perform in line with the broader U.S. equity market over the next one to three months.
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