Chevron's Costly LNG Project to Start in Shadow of Oil Crash

Oil should rise to about $70 a barrel by the end of the decade, according to FGE. Low prices in the first few years hurt the cash flowing into a development like Gorgon, but they “do not make a project bad overnight,” given Chevron has supply contracts spanning 25 years, Taverner of IHS said.

“It is unfortunate timing to start up a long-gestating LNG project in such a weak market,” he said. 

Origin Energy Ltd. and Santos Ltd. also have started up LNG projects in Australia in recent months. With more than 40 million tons per year of new supply being added over the next two years in Australia, Gorgon isn’t alone, he said.

To contact the reporter on this story: James Paton in Sydney at jpaton4@bloomberg.net. To contact the editors responsible for this story: Ramsey Al-Rikabi at ralrikabi@bloomberg.net Abhay Singh, Aaron Clark