Gorgon receives final go ahead from project partners

Gorgon project receives final go ahead.

It was reported today that Chevron and its partners for
the Gorgon project, ExxonMobil and Shell, have given
the final go ahead for the development of the Gorgon
field. Chevron and its partners will pump in A$43bn into
the initial construction phase, with work on the Barrow
Island plant to start immediately, and first gas planned
for 2014. Recall that estimated construction costs for the
Gorgon to be A$50b, and will propel Australia into the
second biggest global LNG supplier. This project is also
estimated to generate A$40b in revenue for the state
and federal governments.

Final investment decision comes soon after supply deals
worth A$145bn secured.
The final investment decision on the Gorgon project
comes hot on the heels of recently secured supply
contracts with China, Japan, India and South Korea for
the Gorgon gas, worth a total of A$145bn, including
ExxonMobil’s A$50bn deal with PetroChina, secured just
recently in mid-August.

As a recap, Ezion via its JV company, Offshore Marine
Services Alliance (OMSA), was awarded a A$350m
contract for the supply of marine vessels and labour for
a minimum 3-year period. Its other 2 JV partners include
Skilled Group from Australia and PBSea-Tow, a whollyowned
subsidiary of Pacific Basin from Hong Kong.
Contributions from Gorgon may kick in earlier than
expected; maintain BUY on Ezion.

With the final investment decision being made, we now
expect the project timeline to be firmed up soon, which
could potentially lead to opportunity for earnings
upgrade, given that we have assumed contributions
from this project, via the chartering of vessels from its
own fleet and its JV company, OMSA, to kick in from
2H10 onwards. Maintain BUY on Ezion, TP unchanged
at S$0.94.
DBS Group Research . Equity 14 September 2009
Singapore
Flash Notes