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Chevron s Gorgon LNG project.
Chevron's Gorgon LNG project.

Chevron has told investors its biggest-ever development, the $US54 billion Gorgon LNG project, remains on track to begin producing by the middle of next year.

Speaking at its annual investor day in the US overnight, Chevron also flagged plans to sell $US10 billion of non-core assets over the next three years while conceding that it would not make its 2017 production guidance of 3.3 million barrels of oil-equivalent a day.

Instead Chevron is targeting production of 3.1mbpd, attributing the decline in forecast output on reduced efforts on US gas production - because of lower gas prices - and a high crude oil price which was likely to cut its share of some of its international hydrocarbon volumes.

But chairman and chief executive John Watson said Chevron's growth strategy remained in tact "though some things have changed".

Most of the assets which are to be sold will be within Chevron's upstream portfolio, although Mr Watson would not single out individual projects. Most of the cull will focus on assets where production has already peaked, or ones that are too small to make a critical difference to one of the world's biggest oil and gas companies.

"These are all assets that are late in their lives or very early in life and won't compete for capital inside our company," Mr Watson told investors.

Importantly for investors, Chevron did not change cost or timetables for Gorgon or its other mega-LNG project in WA, the $US29 billion Wheatstone development near Onslow. Gorgon and Wheatstone, which is slated to enter production in 2016, are key planks for Chevron's global production growth plan.

Gorgon, whose cost and timetable have already been adjusted twice, is scheduled to produce 15 million tonnes of LNG a year and is almost 80 per cent complete. Wheatstone's two-train set-up will produce 8.9mtpa and construction is 30 per cent complete.

Chevron used last night's presentation to also highlight its newly-acquired acreage position in the Great Australian Bight, where it is joining BP in the hunt for oil and gas riches. The Bight is considered a frontier area and wells will be expensive.

Chevron's 2017 production target of 3.1mbpd includes the company's assumption of a crude oil price averaging $US110 a barrel.

The West Australian

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