INTERVIEW: Chevron Australia focuses on long-term customers as Gulf war disrupts LNG supply

Chevron Australia is keeping its focus on long-term customers as disruptions in the Middle East have a "significant impact" on LNG supply and pricing, President Balaji Krishnamurthy told Platts, part of S&P Global Energy, on March 14.

"Currently, we are focused on supplying our long-term customers. Most of our LNG contracts are on a long-term basis," Krishnamurthy said in an interview on the sidelines of the inaugural Indo-Pacific Energy Security Ministerial and Business Forum in Tokyo.

He added that a lot of their supplies are sent to Japan from their two projects in Australia -- Gorgon and Wheatstone.

Platts assessed JKM -- the benchmark price reflecting LNG delivered to Northeast Asia -- for April at $18.922/MMBtu on March 13, compared with $10.697/MMBtu Feb. 27, prior to the Gulf conflict.

LNG prices rose as high as $25.393/MMBtu on March 3, the highest level since 2022, as the ongoing Middle East conflict affected LNG supply flows.

The price surge came as QatarEnergy on March 4 declared force majeure on its LNG supplies to affected buyers, having halted LNG production on March 2 due to military attacks on its operating facilities in Ras Laffan Industrial City and Mesaieed Industrial City.

"Middle East, particularly Qatar, represent 20% of LNG supply to the global markets. And given they have announced force majeure, it is certainly having a significant impact on supply of LNG as well as the pricing," Krishnamurthy said.

"You can see between Europe and Asia, the competition for constrained LNG is driving up pricing," he said.

'Operating at max LNG capacity'

Chevron Australia's Gorgon LNG Project is located on Barrow Island, Western Australia. It comprises a three-train LNG facility with a capacity of 15.6 million mt/year.

Meanwhile, its Wheatstone Project has onshore facilities located west of Onslow on the Pilbara coast of Western Australia, with the foundation project comprising two LNG trains with a combined capacity of 8.9 million tons per annum, and a domestic gas plant.

Chevron's Gorgon is among the world's largest LNG projects and the largest single resource project in Australia, according to the Chevron Australia website.

When asked whether Chevron Australia is coping with incremental LNG demand from Asia amid Gulf supply disruptions, Krishnamurthy said the company sells most of its LNG under long-term oil-linked contracts. "We do have some short-term spot cargoes that we continue to market and sell, and we work with our usual customer base for those additional spot cargoes," he said.

"But from a plant perspective, the two LNG plants that we have in Australia, they are currently plant facility constrained," he said.

The company continues to run its plants at maximum capacity to cater to its long-term customers, according to Krishnamurthy.

"So, we are operating at max LNG capacity. And our focus is to continue to run them reliably so that we can supply our customers... we would certainly be working with our long-term customers as first priority," he said.