Chevron Unit Approves A$3 Billion Investment for Gorgon Stage 3

Chevron Australia and its joint venture partners approved a A$3 billion final investment decision for Gorgon Stage 3 on December 5, a development the consortium says will tie the offshore Geryon and Eurytion fields into existing Barrow Island infrastructure. The project will drill multiple new wells as part of a backfill program intended to extend the producing life of the fields and maintain regional gas output for both export and domestic markets. A$3 billion is roughly equivalent to $1.98 billion.

The Gorgon joint venture is dominated by global majors Chevron, Exxon Mobil and Shell, and the partners have signalled that the capital commitment follows internal reviews and filing documents that lay out drilling plans and potential field life projections stretching into the coming decades. The partners position Stage 3 as critical to sustaining flows into the liquefied natural gas trains on Barrow Island that supply Asian buyers and to ensuring compliance with Western Australia’s domestic reservation rule, which requires 15 percent of production be available for the local market.

Regulatory clearance milestones remain to be satisfied before work can fully ramp up, according to regulatory commentary and filing documents. The approvals process is expected to cover state and federal permits related to offshore tie backs, environmental management and onshore processing modifications, and the joint venture has indicated it will follow the standard approval pathway. Timelines in the filings imply phased drilling and tie in activities over several years, reflecting the technical complexity of integrating new subsea wells with long standing onshore facilities.

Market participants are likely to view the FID as a pragmatic response to an evolving supply picture across Asia and the Indian Ocean region. Australia is one of the world’s largest LNG exporters, and projects that sustain existing infrastructure are often lower carbon and lower cost compared with greenfield developments. For buyers in Asia the decision reduces near term supply uncertainty, and for Western Australian energy users the project represents an additional source of contracted domestic gas that should ease tightness driven by rising demand from mining and manufacturing.

From a policy and investment perspective the decision highlights how domestic reservation rules can interact with commercial planning to secure gas for local industry while preserving export revenue. The A$3 billion commitment signals that major oil companies still see value in investing in mature basin redevelopment as a way to prolong asset life and protect market share in a competitive global gas market.

Looking ahead the key variables to watch are the pace of regulatory approvals, the drilling success of the Geryon and Eurytion wells, and the schedule for tie ins to Barrow Island facilities. Together those factors will determine whether Stage 3 can deliver the continuity of supply the joint venture projects and how it will factor into Australia’s longer term energy mix.