Chevron begins restart of Australia’s Gorgon LNG

By Henning Gloystein

SINGAPORE, May 19 (Reuters) -- Chevron has begun to restart its Gorgon liquefied natural gas (LNG) export facility in Australia following an unplanned shutdown in April, the US energy major said.

"We confirm start-up activities are underway on Gorgon train one with a plan to safely resume production in the coming weeks," a Chevron spokesman told Reuters.

The $54-billion Gorgon project shut down in April following technical problems, shortly after starting up first production.

Traders had thought the shutdown would help to support Asian LNG prices, but despite the loss of the expected new source of supply, spot cargo prices are still running at nearly 80% less than a peak hit in early 2014.

Sources said the facility's return to operation would be gradual, and that the next export cargo was still weeks away, possibly not until June or later.

Chevron had said on April 6, shortly after the facility was shut down, that a restart of the LNG export plant was expected within 30-60 days.

Gorgon's first cargo, shipped in March, was exported to Japanese utility Chubu Electric.

The Gorgon project on Barrow Island off the northwest coast of Western Australia is a joint venture involving the Australian subsidiaries of operator Chevron with 47.3%, ExxonMobil and Shell with 25% each, Osaka Gas at 1.25%, Tokyo Gas at 1% and Chubu Electric Power at less than 0.5%.

Gorgon will have the capacity to produce 15.6 MMtpy of LNG once all three production trains are operating.

Gorgon was initially expected to cost $37 billion and start exports in 2014, but delays and soaring costs pushed the start-date back and the price tag up.

Gorgon is part of a huge expansion in Australian LNG production which, together with emerging exports out of the US, contributed to a fall in Asian spot LNG prices since February 2014 from more than $20/MMBtu to below $5/MMBtu.