Environmental concerns cloud Gorgon project

Vol 10, PW 5 (29 Jun 06) Midstream & Downstream

Heightened environmental concerns over the Gorgon LNG project off the northwest coast of Australia make the likelihood of an early gas Supply Purchase Agreement (SPA) between Petronet-LNG and Exxon Mobil more remote than ever.

Western Australias Environmental Protection Agency (EPA) delivered a near fatal blow to the proposed facility on 6th June describing it as environmentally unacceptable because of its impact on the rare and threatened flatback turtle species, which has nesting beaches near the proposed LNG facility on Barrow Island. PETROWATCH learns Gorgon consortium leader Chevron was given until 20th June to appeal against the EPA ruling, which it did.

They (EPA) are adamant that the project is environmentally unfit, reveals a source. But the consortium is equally adamant that the project meets all environmental standards.

He adds: Chevron has made it clear several times that the EPA ruling will delay Gorgons Final Investment Decision (FID). The FID wont happen this year; it has been put back to next year.

An industry source close to the Gorgon project tells PETROWATCH a third party independent arbitrator will hear Chevrons 20th June appeal against the EPA ruling before it goes to an Australian industry tribunal in October or November. From there it will go to the state cabinet of premier Alan Carpenter for a final decision.

If clearance comes it will be around December this year, he adds. After that we can expect the FID for Gorgon by March next year.

At the earliest, we hear, the SPA with Petronet-LNG is likely in two to three months before they make the FID or put simply: by December 2006 or January 2007. No fixed date has been set for the SPA, we hear.

India is trying very hard to get Gorgon LNG. Every time Petronet-LNG and Exxon meet they certainly make progress.

Still, if the Gorgon project fails to clear the environmental hurdles put up by the EPA, all those talks will have been in vain.