Chevron (NYSE:CVX) plans to start up operations from a liquefied natural gas (LNG) facility in Angola in late June 2012. This facility will handle the production of associated and non-associated natural gas from the country's offshore oil and gas fields.

Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.

Angola LNG
Chevron began construction of the LNG facility near the city of Soyo in late 2008 and holds a 36.4% interest in the project. The plant will cost $10 billion and will be able to process 1.1 billion cubic feet of natural gas per day after it ramps up.

Chevron reported gross production of 543,000 barrels of oil equivalent and other liquids in 2011, and has most of its operations in Block Zero and Block 14 located offshore Angola. The company plans to transport the associated gas from these operations to be processed at the Angola LNG.

SEE: Natural Gas Industry: An Investment Guide

Total (NYSE:TOT), Eni (NYSE:E) and BP (NYSE:BP) each own 13.6% of this LNG facility and will also transport associated gas production from offshore fields to the facility to be processed. The companies have operations in offshore Blocks 15, 17 and 18, respectively.

Non-Associated Gas
Angola also has significant reserves of natural gas that have not been developed due to insufficient local demand and not having access to a LNG facility. Angola is now planning to develop these natural gas fields in Blocks 1 and 2 and have the LNG plant handle this production.

Chevron's original plan was to transport the liquefied gas to the Gulf LNG Energy plant in Pascagoula, Mississippi, where it would be regassified and sold to markets in the United States. This plant was chosen because it is 20% owned by Sonangol Group, which is the national oil company of Angola.

SEE: How To Profit From Natural Gas

Since markets in the United States are oversupplied and prices are much lower than when the project was initiated, much of the output may be sold to Asian and European markets.

Other operators are also considering building LNG plans to handle stranded natural gas reserves. Anadarko Petroleum (NYSE:APC) has found large amounts of natural gas in offshore Mozambique and will need a LNG facility to handle the production.

Apache Corporation (NYSE:APA), EOG Resources (NYSE:EOG) and Encana Corporation (NYSE:ECA) are building the Kitimat LNG export plant on the western coast of Canada. The project just received a 20 year export license and will handle natural gas production from the Horn River Basin and other areas in the region.

Royal Dutch Shell (NYSE:RDS.A, RDS.B) recently announced a similar plant near Kitimat and is partnering with several Asian companies here. TransCanada (NYSE:TRP) has proposed building a pipeline to connect the plant to Royal Dutch Shell's natural gas fields in British Columbia.

SEE: Uncovering Oil And Gas Futures

The Bottom Line
Angola is starting to become a major force in world oil markets and may soon have similar influence in natural gas as the country will soon become a major exporter of this commodity.

At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  2. Fundamental Analysis

    4 Predictions for Oil in 2016

    Learn four predictions for oil markets in 2016 including where prices are heading and the key fundamental factors driving the market.
  3. Fundamental Analysis

    Performance Review: Commodities in 2015

    Learn how commodities took a big hit in 2015 with a huge variance in performances. Discover how the major commodities performed over the year.
  4. Investing News

    Icahn's Bet on Cheniere Energy: Should You Follow?

    Investing legend Carl Icahn continues to lose money on Cheniere Energy, but he's increasing his stake. Should you follow his lead?
  5. Stock Analysis

    Analyzing Google's Return on Equity (ROE) (GOOGL)

    Learn about Alphabet's return on equity. How has its ROE changed over time, how does it compare to its peers and what factors are driving ROE for the company?
  6. Investing News

    Is Buffett's Bet on Oil Right for You? (XOM, PSX)

    Oil stocks are getting trounced, but Warren Buffett still likes one of them. Should you follow the leader?
  7. Stock Analysis

    The Biggest Risks of Investing in SandRidge Stock

    Learn about the significant risks of investing in SandRidge. Read how the company may not be able to service its substantial debt load.
  8. Stock Analysis

    The Top 5 Micro Cap Alternative Energy Stocks for 2016 (AMSC, SLTD)

    Follow a cautious approach when purchasing micro-cap stocks in the alternative energy sector. Learn about five alternative energy micro-caps worth considering.
  9. Economics

    Will Silver Recover in 2016? (SLV, GLD, JJC)

    The end of the silver downtrend is likely to coincide with similar recoveries in gold, iron and copper.
  10. Stock Analysis

    The Top 5 Silver Penny Stocks for 2016 (LODE,AG)

    Learn about five of the top silver penny stocks and why investors may want to consider adding them to their investment portfolios in 2016.
RELATED FAQS
  1. Which mutual funds made money in 2008?

    Out of the 2,800 mutual funds that Morningstar, Inc., the leading provider of independent investment research in North America, ... Read Full Answer >>
  2. Do hedge funds invest in commodities?

    There are several hedge funds that invest in commodities. Many hedge funds have broad macroeconomic strategies and invest ... Read Full Answer >>
  3. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  4. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  5. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  6. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center