Chevron Corp.
(CVX), the second-biggest U.S. energy company, gained approval from the Australian environment ministry to start its Gorgon liquefied natural gas (LNG) venture on the Barrow Island nature reserve. The decision is subject to conditions on managing and protecting local fauna, especially the endangered flatback turtle.

Chevron holds a 50% operated interest in the $42 billion project, with the other partners being ExxonMobil Corp. (XOM) and Royal Dutch Shell PLC (RDS.A). The government approval to Australia’s single largest natural resources project paves the way for a final investment decision by the Gorgon joint venture participants, once they get the nod for production licenses and construction plans.

The Gorgon gas fields, off the coast of Western Australia, are estimated to contain 40 trillion cubic feet of gas deposits and have an expected economic life of at least 40 years from the time of start-up. Chevron said that the venture will have an annual capacity to produce 15 million tons of LNG, with the first shipment expected in 2014.

The Gorgon development is expected to provide huge quantities of liquefied gas for export to China and other Asian nations. ExxonMobil and Royal Dutch Shell have already signed deals to sell much of their share of Gorgon production to Asian importers, including PetroChina Co. Ltd. (PTR).

We believe that the Gorgon approval will significantly boost Chevron’s long-term growth prospects in the fast-growing LNG market. Also, the business environment for LNG continues to remain robust, with demand likely to grow at around 8-10% annually over the next few years in all major markets.

San Ramon, California-based Chevron is the fourth-largest publicly traded oil and gas company in the world, based on proved reserves. It is engaged in oil and gas exploration and production, refining and marketing of petroleum products, manufacturing of chemicals and other energy-related businesses.

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