Chevron's Gorgon LNG Facility Halts Production, Raising Global Supply Concerns

Chevron Corp.'s Gorgon liquefied natural gas (LNG) export facility in Australia has halted production on one of its three units because of a pipeline issue. This development threatens to further tighten global LNG supplies.

Why this matters: The halt in production at Chevron's Gorgon LNG export facility has significant implications for global energy supplies and prices. This disruption could lead to further price increases and supply chain instability, affecting consumers and economies worldwide.

The facility, located on Barrow Island, has a capacity of 15.6 million metric tons of LNG per year. The production halt occurred on Monday, June 3, 2024, shortly after the facility had resumed full operations on Friday, May 31, 2024, following maintenance on a unit for most of May.

The pipeline issue at Gorgon comes at a critical time as European supplies are already at risk following an outage at the Nyhamna gas processing plant in Norway, a key supplier to Europe. This has led to a surge in European gas prices by 13% on Monday, driven by scarcity concerns.

Chevron has not yet responded to requests for comment, and the duration of the production halt remains unknown. The Gorgon facility is a significant contributor to global LNG supplies, and any prolonged disruption could have far-reaching implications for the market.

Other shareholders of the Gorgon facility include Exxon Mobil Corp. and Shell Plc. The halt in production at Gorgon exacerbates the already tight global LNG market, which has been under pressure as a result of various supply constraints.

Australia is one of the largest LNG exporting countries in the world, with Chevron's Gorgon and Wheatstone LNG plants accounting for a significant portion of global LNG supply. The Gorgon facility alone accounts for about 5% to 7% of global LNG supply.

The current situation highlights the fragility of global LNG supply chains and the potential impact of unexpected disruptions. Energy supply challenges continue to pose significant threats, and the stability of key facilities like Gorgon remains important.

To recap, the halt in production at Chevron's Gorgon LNG export facility, stemming from a pipeline issue, threatens to further tighten global LNG supplies. The duration of the halt is currently unknown, adding to the uncertainty in an already strained market.

Key Takeaways

• Chevron's Gorgon LNG export facility in Australia halts production on one unit due to pipeline issue.
• Facility has a capacity of 15.6 million metric tons of LNG per year, accounting for 5-7% of global supply.
• Halt comes at critical time as European supplies are already at risk due to outage at Nyhamna gas processing plant.
• Duration of production halt unknown, adding to uncertainty in already strained global LNG market.
• Disruption could lead to further price increases and supply chain instability, affecting consumers and economies worldwide.