Chevron Corp. to start work on big Gulf of Thailand gas project

Chevron Corp. and two partners will start work on a $3.1 billion natural gas project in the Gulf of Thailand.

David O'Reilly, Chevron's chairman and CEO, traveled to Bangkok in late October to extend leases the San Ramon company picked up when it bought Unocal in 2005.

Now the company will start building the Platong Gas II project, which should start working in the first quarter of 2011. It will put out about 420 million cubic feet of natural gas per day.

Chevron hopes to eventually boost gas production from its leases in this area to 1 billion cubic feet per day. The leases are in the center of the gulf bounded by Thailand on the north and west and Cambodia and Vietnam on the east. The Unocal contracts from the Thai government were set to expire in 2012 and have now been extended to 2022.

Platong and the other lease areas -- named Erawan, Satun, Funan, Banpot, Plamuk, Yala and Pla Daeng -- are along a rough north-south line to the west of another area where Cambodia and Thailand have disputing claims going back to 1972.

Chevron (NYSE: CVX) shares the leases with Mitsui Oil Exploration Co. and PTT Exploration and Production Public Co. Chevron has a 69.8 percent stake in the Platong Gas II project, and is also its operator. Along with its venture partners, Chevron, which has about 180 platforms in the gulf, has paid about $3.5 billion in royalties to Thailand since 1981.

Chevron has 195 platforms in the Gulf of Thailand producing both oil and natural gas.