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LNG World Shipping

Chevron acquisition grows LNG portfolio

Tue 16 Apr 2019 by John Snyder

Chevron acquisition grows LNG portfolio
Asia Energy was one of six LNGCs added under Chevon's largest shipbuilding programme image: Chevron

Chevron's acquisition of Andarko would grow its LNG portfolio, which already includes projects in Australia, Africa and Canada

While Chevron Corporation will emerge as the third largest producer of oil, following its US$33Bn acquisition of Andarko Corp., it will also significantly increase its position in LNG.

“The combination of Anadarko’s premier, high-quality assets with our advantaged portfolio strengthens our leading position in the Permian, builds on our deepwater Gulf of Mexico capabilities and will grow our LNG business,” said Chevron chairman and chief executive Michael Wirth.

In East Africa, Anadarko is developing Mozambique’s first onshore LNG facility consisting of two initial LNG trains with a total nameplate capacity of 12.88 million tonnes per annum (mta) of LNG. to support the development of the Golfinho/Atum field located entirely within Offshore Area 1. There is an estimated 75Tn ft3 of recoverable natural gas in Offshore Area 1.

Anadarko Moçambique Área 1, Lda, a wholly owned subsidiary of Anadarko Petroleum Corporation, operates Offshore Area 1 with a 26.5% working interest. Other stakeholders are ENH Rovuma Área Um, SA (15%), Mitsui E&P Mozambique Area1 Ltd (20%), ONGC Videsh Ltd (10%), Beas Rovuma Energy Mozambique Limited (10%), BPRL Ventures Mozambique BV (10%), and PTTEP Mozambique Area 1 Limited (8.5%).

Mozambique LNG has executed long-term Sales and Purchase Agreements (SPA) for 9.5 mta of LNG.

Mozambique LNG is one of the first subsea developments in the East African country. Located close to shore, Mozambique LNG will use a subsea gathering system to tie subsea wells directly to shore. This gathering system will be capable of handling 2Bn ft3 per day (BCF/d) of natural gas.

Andarko and its partners have selected UK-based TechnipFMC and Netherlands-based Van Oord as the preferred offshore construction and installation contractor for the subsea work.

Mozambique LNG plans to build two initial LNG trains, each with capacity of 6 mta. The project is scalable so it could be expanded up to 50 mta and its location provides competitive shipping routes to South America, Europe, Asia and the Middle East. An FID on Mozambique LNG is expected in 1H of 2019.

Mozambique LNG will already build on Chevron’s significant holdings in LNG, including a 47.3% ownership in LNG trains 1-3 at Australia’s Gorgon Project and 64.1% stake in Wheatstone LNG, both in Western Australia and a 38.1% interest in the pipeline that transports natural gas from the Mafumeira Sul field to Angola LNG in West Africa. Chevron has a 39.2% interest in Block 0 located at Mafumeira Sul. It also has LNG interests in Canada and natural gas activities in Asia and Southeast Asia.

As for its oil business, Andarko’s shales assets in the Permian Basin in the US are particularly attractive said Rystad Energy founding partner and head of research Per Magnus Nysveen. "We have always considered Anadarko as having the best positioned acreage in the sweetest spot of the Permian Delaware basin,” said Mr Nysveen. “Combining these shale assets with Chevron’s strong legacy position in the same area, we will now see Chevron emerging as the clear leader among all Permian players, both in terms of production growth and as a cost leader."

Andarko Corp. is a big independent player in exploration and project management in the US Gulf of Mexico, operating 10 deepwater facilities, and has interests in deepwater blocks offshore Africa and South America.

Mr Nysveen said the combination of Chevon and Andarko "will be by far the largest producer in the Permian, which is the fastest growing basin in the world, well ahead of ExxonMobil. By 2025 the merged entity will be able to produce as much 1.6M barrels of oil per day from the Permian basin alone."

Rystad Energy said Chevron and Anadarko, which currently rank as the world’s 10th and 41st largest producers of oil and gas, respectively, will climb to seventh place after the merger. The new entity will jump ahead of Shell and BP in the rankings and will trail only ExxonMobil and the five biggest national oil companies.

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