Australian LNG exports grow with Gorgon's first cargo

Report summary

Six-and-a-half years since FID was taken on the 15.6 mmtpa Gorgon LNG project, the first cargo has sailed from Barrow Island. Gorgon is the fourth of the seven Australian LNG projects sanctioned since 2009 to come onstream and should deliver substantial amounts of cash flow to the project partners. The project has been exposed to resource boom-led cost inflation and a strong Australian dollar.  Cost escalation on key components, a complicated logistics chain due to the site selection, and workforce issues also all contributed to budget increases. Getting the project to first LNG is an enormous achievement by operator Chevron. However, the company must now focus on the ramp phase of Train 1 and managing the risk of slippage in the delivery of Trains 2 and 3. The economics of a proposed Train 4 at Gorgon, like most brownfield developments, stack up well against proposed greenfield developments. This remains a viable option for future development.