(Correct 2nd paragraph to read “June 2022” instead of “last month”)
By Curtis Williams
(Reuters) – Chevron Corp is comfortable buying U.S. liquefied natural gas (LNG) under long-term contracts rather than building its own U.S. export facility, Freeman Shaheen said , the company’s head of global gas.
The second-largest US oil and gas producer in June 2022 signed agreements with LNG developers Cheniere Energy and Venture Global LNG for a combined total of 4 million tonnes per annum (MTPA) of super-chilled natural gas. The deals will give it more gas and diversify its risks, he said.
Chevron has stakes in LNG projects in Angola, Australia and has taken early steps with partners to advance a floating LNG project off the coast of Israel that would process gas from the Leviathan field.
The Cheniere and Venture Global LNG deals will provide an outlet for natural gas from its Permian Basin shale operations in West Texas and New Mexico. The company owns approximately 2.2 million acres in the largest shale field in the United States.
As Chevron’s production in the Permian increased, it had to decide how much gas would stay in the United States and how much should be exported, Shaheen said. It chose not to build an export terminal in the United States, where several large factories are already under construction.
The company had to balance the investments needed to build an LNG facility in the United States against drilling oil and gas wells in the Permian, or investments in the Eastern Mediterranean, Argentina or West Africa, a said Shaheen.
Shaheen said start-up issues at Venture Global LNG’s Calcasieu Pass plant, which sparked disputes with other major gas producers over delays in receiving their commercial cargoes, did not unduly Chevron worried.
“That’s always a concern for any project that you do. … So we have to weigh that in the balance in terms of managing our sales and our portfolio,” Shaheen told Reuters at the LNG 2023 conference this week.
Major LNG traders Shell (SHEL.L) and BP (BP.L) separately filed for arbitration against Venture Global LNG for failing to supply contracted cargoes, even as it sold to customers without contract as prices soared last year.
(This story has been reclassified to say “June 2022” instead of “last month” in paragraph 2)
(Reporting by Curtis Williams in Houston; Editing by Josie Kao)