THE WALL STREET JOURNAL: Chevron, Exxon, Shell Reach Pact On LNG Project (ShellNews.net) 5 April 05

By RUSSELL GOLD

Staff Reporter of THE WALL STREET JOURNAL

April 5, 2005; Page A10

ChevronTexaco Corp., Exxon Mobil Corp. and Royal Dutch/Shell Group have agreed to jointly develop several natural-gas fields off the Australian coast, according to officials familiar with the agreement.

The move is aimed at lowering overall costs and bolstering the marketing clout of the project, which will produce liquefied natural gas for markets in Asia and the U.S. West Coast.

The combined field, which includes the Gorgon and Io-Jansz fields, has an estimated 40 trillion cubic feet of recoverable gas, making it one of the largest in the world. The companies haven't booked the gas as undeveloped reserves yet because final sales agreements aren't in place.

In the deal, ChevronTexaco will have a 50% stake and will operate the field. Exxon Mobil and Royal Dutch each will take a 25% stake, according to officials. To reach this split, ChevronTexaco is expected to sell some interests to Royal Dutch; details of that transaction weren't available.

By pooling the field, the companies hope to achieve several outcomes: lower overall development costs, the drilling of fewer wells and securing better deals for the gas, which will be cooled until it turns into a liquid, loaded onto specialized insulated tankers and sent to overseas markets.

China National Offshore Oil Corp. is in preliminary talks with the companies on a gas-sale agreement. Because of the multibillion-dollar cost of building the infrastructure to transport the gas, these types of gas projects require long-term sales contracts before the companies typically make investment decisions.

Write to Russell Gold at russell.gold@wsj.com 

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