Chevron Inks New Australian Gas Supply Deal
The five-year agreement for Western Australian gas highlights the company's global LNG portfolio strength.
Chevron Corporation has signed a new agreement to supply natural gas from Western Australia to utility Alinta Energy, according to a report from Rigzone. The deal, announced July 10, covers 46 petajoules of gas over a five-year period.
While the supply originates from Chevron's Australian assets, the deal underscores the integrated major's ongoing activity in the global liquefied natural gas (LNG) market. Chevron is a significant operator in the Bakken formation of North Dakota, where it holds extensive acreage and production.
For Bakken-focused operators and service companies, Chevron's continued investment in its worldwide gas portfolio provides stability. A strong global LNG market can indirectly support natural gas prices, which influence the economics of associated gas produced from the Bakken's oil wells. However, the direct supply for this contract is not linked to U.S. production.
The agreement also reflects the long-term contracting strategies common among large, diversified producers like Chevron. Securing steady offtake agreements for production helps de-risk major capital investments in large-scale projects worldwide. This financial stability at the corporate level can support continued investment across a company's portfolio, including its shale assets.
The Bakken formation is primarily an oil play, but it produces significant volumes of associated natural gas. Market dynamics for gas, including international LNG demand, can affect the value of this byproduct and influence operators' decisions on gas capture infrastructure and flaring reduction efforts in North Dakota.
Rigzone reported the deal but did not disclose specific financial terms. The focus of the supply is on the domestic Australian market.
Source
Rigzone
