Mechanical Problems Halt LNG Exports from Gorgon Mega-Project
By Henning Gloystein
SINGAPORE, April 4 (Reuters) – Chevron’s huge Gorgon liquefied pure gasoline (LNG) facility in Australia has hit technical difficulties, a spokesman stated on Monday, leading to a brief suspension of exports lower than a month after it began first manufacturing.
Chevron’s $54-billion mission started producing LNG for export on March 7, however has since encountered mechanical issues at a cooling unit that stops the plant from chilling pure gasoline for exporting on tankers.
“We are working through some mechanical issues with the propane refrigerant circuit on train 1 at the Gorgon plant site,” a Chevron spokesman stated.
The spokesman stated he couldn’t at this stage give any particulars and added that “a site team is currently assessing the situation and we should know more shortly.”
Traders stated that the outage of the large facility, positioned on Australia’s northwestern coast, might assist Asian LNG costs which have slumped by nearly 80 % from their peak in 2014 to $4.30 per million British thermal items. Prices have plummeted as provide has soared however demand has stalled, particularly in previously booming Asia.
The interruption in exports will put strain on Chevron, whose inventory worth up to now has fared comparatively effectively within the droop in contrast with friends (see chart: http://tmsnrt.rs/1Xb1Aez).
Investment financial institution Jefferies stated on Monday that Chevron stays its “top pick in the integrated oil sector” on account of rising manufacturing and an anticipated enchancment in its money cycles.
Yet, Jefferies warned that “the key risk to our Buy thesis over the next 12 months is project execution risk, particularly at Gorgon and Wheatstone (another LNG project in Australia).”
Gorgon has the capability to supply 15.6 million tonnes of LNG per 12 months.
The facility was initially anticipated to price $37 billion and begin exports in 2014, however delays and hovering prices pushed the beginning date again and the value tag up.
Its first cargo, which was shipped in March, is anticipated to be delivered to Japanese utility Chubu Electric this month, sources stated.
(Reporting by Henning Gloystein; Editing by Himani Sarkar and Christian Schmollinger)
(c) Copyright Thomson Reuters 2016.
