Regional LNG: Australia's Gorgon Venture gets supply commitment to US West Coast

The Gorgon Venture announced on Monday that Royal Dutch/Shell Group, one of its joint venture partners has finalized plans to secure entry for Australia?s Greater Gorgon gas to the North American West Coast market.

The Venture said that Shell had committed capacity from the Energia Costa Azul terminal in Baja California, in which it holds 50% of the capacity rights, to take its share of gas from the Gorgon LNG project. This facility, which is currently under construction, will be the first LNG receiving terminal on the North American West Coast. Another half of Costa Azul?s capacity would be supplied from Indonesia?s Tangguh LNG starting 2008. Sempra LNG is the sole owner and operator of Energia Costa Azul, but has signed a 20-year agreement to provide Shell International Gas Limited with half the facility's processing capacity, or 500 MMcf/day.

Shell?s commitment secures a market for up to 2.5 million tonnes per annum of LNG from the proposed 10 million tonnes per annum initial Gorgon project. First deliveries to the North American West Coast are expected in 2010.

This deal is reportedly worth at least US$10 billion and it is the first supply deal to be finalized for the Gorgon project."

Paul Oen, General Manager of Gorgon Area Gas, said a number of developments had moved the project closer to commercialization. ?We recently announced new commercial arrangements that will help facilitate the development of the vast Greater Gorgon gas resources. Today?s announcement is another positive step forward for the project,? Oen said.

The Gorgon Joint Venturers are also actively targeting LNG markets in China, Japan and Korea.

The Gorgon joint venturers are affiliates of ChevronTexaco (operator and 50% interest), ExxonMobil (25%) and Shell (25%). (alex)