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Shell and its partners today struck a deal that will finally see the go-ahead for the world's biggest new liquefied natural gas (LNG) project.
The British oil giant owns a 25% stake in the proposed Gorgon LNG project in Australia, and, along with Chevron and ExxonMobil, has agreed to build it at a lower-than-expected cost of £37 billion.
Gorgon should produce 8% of the world's LNG when it begins production in 2014.
Petrochemicals giants see the liquid form of gas as a massive growth area for the industry. It can be easily transported by ship, meaning customers do not need a costly infrastructure of pipelines to receive it. Demand is expected to surge in Asia where economies are growing quickly.
Gorgon is likely to make Australia the second biggest LNG exporter after Qatar.
George Kirkland, executive vice president of global upstream and gas at Chevron said: “Gorgon is destined to be an iconic project, a legacy project with massive investments set in motion today.”
While the go-ahead, which follows years of delay, will bring relief to Shell, Chevron and ExxonMobil, it will be seen as a catastrophe by environmental campaigners, who have cited serious concerns about its location on Barrow Island off the coast of Western Australia.
It was also hampered by concerns about building costs, although the recent downturn in the oil and gas industry has reduced this.
Among the winners from the deal will be the many contractors who work on developing the project, including London Stock Exchange-listed Kentz Corporation, which is slated to be involved.
Kentz today said pre-tax profit rose to $18.5 million (£11.1 million) in the six months to June 30 from $16.8 million in the same period a year earlier.
