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Chevron Corporation (CVX)’s Future in Angolan LNG Looks Bright

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Chevron Corporation (NYSE:CVX)’s first-quarter profits exceeded expectations, though its performance was affected by cheaper oil prices. The company’s future in 2013 and beyond looks bright because its long-awaited liquefied-natural-gas project in Angola, one of Africa’s top oil-producing countries, will kick-start this year. The fact that this long-awaited project will finally take off is enough to boost investor confidence despite a sluggish oil market.

Chevron Corporation (NYSE:CVX)

I would like to point out that Chevron Corporation (NYSE:CVX) announced better-than-expected profits in the first quarter despite a very unfavorable market, and that it will begin its LNG project in Angola. These two facts are enough to convince me that Chevron will perform well this year and beyond.

Chevron’s first-quarter results

Chevron Corporation (NYSE:CVX)’s net income declined to approximately $6.2 billion. This 4.5% reduction has been attributed to cheaper oil prices and a general reduction in demand for oil and natural gas.

However, Chevron’s earnings outside the U.S. rose 3.1%. Oil production increased too, if we compare the figures with last year’s results. Chevron Corporation (NYSE:CVX) produced approximately 2.7 million barrels oil equivalent/day, while during the same period last year it produced 2.6 million BP plc (ADR) (NYSE:BP)d.

Increasing its production has been a problem for Chevron, which continually operates in some of the most troubled regions of the world, such as Iraq and Nigeria. With that in mind, it is important to view its LNG project in Angola from a particular perspective.

Chevron Corporation (NYSE:CVX)’s interests in the Angola LNG project are represented by Cabinda Gulf Oil, a company that is wholly owned by the former. It has a 36.4% stake in the project while Sonangol, an oil company based in Angola, has a 36.4% interest. BP plc (ADR) (NYSE:BP) and TOTAL S.A. (ADR) (NYSE:TOT) each have 13.6% stakes. The project aims at commercializing Angolan natural-gas resources by drilling, treating and transporting the fossil fuel to a liquefaction plant located in Angola’s Zaire province.

The sheer magnitude of the project makes me shake my head with disbelief. The project aims to produce 5.2 million metric tons a year of LNG. The project is expected to help Chevron further expand its oil business in Angola and produce LNG for both domestic use and export.

The Angolan LNG project has been delayed for almost a year and there were no signs of any progress until March. At that time, an LNG carrier sailing to Angola prompted a flurry of speculations that shipments may soon begin. The Soyo was built in 2011 and has traveled across Greece, Kuwait, South Korea, Norway, Spain and other countries. Recently found at Malaysia, it was bound for Angola.

The ship’s voyage to Angola suggests that Chevron Corporation (NYSE:CVX) is seriously looking at transporting Angolan LNG for commercial use. Angola’s LNG may be exported to energy-hungry nations in Asia such as Japan, China and India.

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