Chevron says produces record number of LNG cargoes in Q3

Chevron said it had produced a record number of LNG cargoes in the third quarter of this year, mostly from its Gorgon and Wheatstone plants in Western Australia.

Earlier this year, Chevron said it expected to have “strong” operational performance this year at its 15.5 mtpa Gorgon LNG facility in Western Australia, following several train shutdowns during the last two years. The firm also completed major turnaround on all three trains.

Besides Gorgon, Chevron completed maintenance turnaround at its 8.9 mtpa Wheatstone LNG plant near Onslow in Western Australia.

Chevron’s two Australian LNG export projects have shipped 87 cargoes in the first half of 2022, a rise when compared to the previous year.

“In the fourth quarter, we expect modest turnarounds. After producing a record number of LNG cargoes in the third quarter, we expect fewer spot cargoes out of Australia due to maintenance and summer temperatures,” Pierre Breber, chevron’s finance chief told analysts during the company’s third-quarter call on Friday.

Breber did not reveal the number of cargoes.

Chevron’s international upstream operations earned $5.91 billion in third quarter, compared with $3.17 billion a year ago.

Net international natural gas production increased 4 percent to 6.21 billion cubic feet per day compared to last year’s third quarter.

The average sales price of natural gas was $10.36 per thousand cubic feet in the third quarter, up from $6.28 in last year’s third quarter.

“In terms of international upstream, the benefit in the third quarter was primarily around a record LNG cargoes out of Australia, primarily Gorgon and Wheatstone and we are very happy to see that,” Breber said.

“And again, a lot of that is under long-term contracts, but that included cargoes in the spot market, which we know we’re at high prices,” he said.

He said that about 80 percent of the company’s LNG cargoes are contracted on long-term contracts and 20 percent are spot sales.

“That’s a combination of both of our Australia LNG operations and our West Africa operations. Our West Africa tends to be almost all spot in Australia is closer to 90-10. So that averages out to about 80-20,” he said.

“And we’ll give guidance on our spot price sensitivity. We’ll do that in the fourth quarter call at the end of January. It depends on how many spot cargoes are produced, both out of, again, our West Africa and Australia operations,” he said.

LNG strategy

Answering a question about the company’s long-term LNG strategy and growth, CEO Mike Wirth said “we’ve long favored the Pacific Basin, given the best customers were in Japan, Korea, Taiwan, markets and our resource position in the Pacific. The Atlantic Basin, we’ve got exposure to it.”

“But Europe traditionally has been a market where you were competing with Russian pipe gas and just less attractive. With the changes now that we see in markets, we’re increasing exposure to Atlantic Basin LNG,” he said.

He said that the company has done a “couple of deals” with Gulf Coast projects that are under development and that would give Chevron offtake that the company can move into global markets.

“And then we’re advancing projects in the Eastern Mediterranean in the assets that were acquired with the Noble acquisition, that would potentially allow an expansion of the Leviathan field to provide LNG supply that can go into global markets,” Wirth said.

“We’re going to stay very disciplined on capital and we won’t invest in everything that we could. We’re going to invest in the best things that we can. And I expect that will include some LNG projects over time,” he said.

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