Australia on track to become world's largest LNG producer

Australia is on the path to rival Qatar as the world's largest liquefied natural gas (LNG) producer after US energy giant Chevron signed off on its $US29 billion ($A29.63 billion) Wheatstone project.

Chevron's Vice Chairman George Kirkland said the project, located in Western Australia's Pilbara region, would be a "strong pillar of the Australian economy for decades".

Construction is set to begin in November, creating about 6500 jobs, with the first gas exports planned for 2016. The project will initially produce about 8.9 million tonnes of LNG per year. Wheatstone marks the second-largest single investment in Australia's resource sector after Chevron's $43 billion Gorgon LNG project on Barrow Island, off WA's Pilbara coast.

"Combine Wheatstone's advantages with those of Gorgon and the results are huge with opportunities and economic benefits on a scale never seen before in Australia," Kirkland said in Perth on Monday.

Total world energy demand is expected to rise 40% by 2030, with most of the growth in demand coming from Asia. Federal Resources and Energy Minister Martin Ferguson said Chevron's announcement meant $140 billion had been committed to new LNG investment since 2007.

"It effectively means by 2014/15 we will go from the fourth-largest export nation to the second," Ferguson said.

The gas will be piped to a processing plant at Onslow, which will also process LNG from the Iago gasfield, operated by Chevron and Shell, located about 225 km off the Pilbara coast. Chevron has locked in 20-year contracts with foundation customers Tokyo Electric Power Company (TEPCO) and Kyushu Electric, both from Japan.

Wheatstone is a joint venture between Chevron (73.6%), Apache (13%), Kuwait Foreign Petroleum Exploration Company (7%) and Royal Dutch Shell (6.4%).

Source: AAP NewsWire