Chevron Australia- White Paper

The Gorgon Project is “one of the world's largest natural gas projects and the largest single resource natural gas project in Australia's history. It has already committed $18 billion to Australian industry, and generated thousands of jobs.”(Chevron Australia) It is operated by Chevron, in joint venture with ExxonMobil and Shell. Construction began December 20, 2009, in Barrow Island off the Pilbara coast of Western Australia. Since then the project has been on track with its five year plan to begin injections of (LNG) Liquefied Natural Gas in late 2014. LNG is the cleanest of the fossil fuels, it is colorless, odorless, and nontoxic, and it can also be safely transported by ship. The demand for LNG around the world is very high, giving this resource the potential to secure Australia’s future as a global player in energy markets around the world.(Chevron Australia (2011))

Gorgon and on track in 2011: Chevron * Introduction My name is Mayte Mariela Jimenez; I am the Policy, Government & Public Affairs General Manager for Chevron Australia in charge of the Gorgon Project. My job is to make sure that all the required policies are implemented to make the Gorgon Project successful. Some of my responsibilities include internal and external communications, regulatory and legislative advocacy, stakeholder and community engagement and reputation. From day one, our core values represent protecting the environment, and protecting the people, with the help of my management team at Chevron, we have been very successful in making sure that policies and regulations are taking place in order to do so.

The purpose of this document is to highlight some of the environmental and safety policies already established and why they are important. Also to provide a recommendation for trading agreements within some of Australia’s major import and export partners. (Media Statements) * Legal and Policy Issues: Protecting the Environment and the People In September 2009 the Gorgon project was approved by the Western Australian Government.

The State and Federal Government jointly accepted responsibility for any long-term liabilities associated with the project. The Western Australian Government adopted various regulations to determine the conditions and terms of the Gorgon Project. Including the Barrow Island Act 2003, and the Gorgon Gas Processing and Infrastructure Project Agreement (the Gorgon State Agreement) and the Processing Infrastructure Project Agreement. These agreements specify the supply of domestic gas to the mainland, access to the island, collecting for net conservation benefits, storage of carbon dioxide and local content obligations. (Andrew Beatty)

The Australian Industry Participation (AIP) Policy was also incorporated, where the Gorgon Project will actively support Australian industry participation as a core business policy. (Colin Beckett) To accomplish the purposes of Australian Industry Participation (AIP) policy, the Gorgon Project will: * “Comply with the requirements of clause 15 of the Gorgon Gas Processing and Infrastructure Project Agreement 2003 (Schedule 1 of Barrow Island Act 2003). * Provide full, fair and reasonable opportunity for Australian industry to supply goods and services to the Project.

* Utilize the resources of the Industry Capability Network (ICN) and other sources including ProjectConnect, SupplyBase Vendor Registration System and Pilbara Business Capability Register (ePilbara), as appropriate, to identify those Australian companies able to supply goods or services commensurate with the quality, safety, environmental, reliability and delivery standards and objectives of the Project. * Provide information and facilitate Project briefings to Australian industry in order for local suppliers to have adequate time to identify potential opportunities and establish their competitive position.

* Identify structural impediments to competitive Australian Industry Participation, such as lack of infrastructure and skills shortages and, with ICN support, make industry and government aware of any such perceived limitations. * Encourage offshore manufacturing and service companies who have leading edge technology applicable to the Gorgon Project to establish local facilities or manufacturing licensees and to aid in technology transfer.

* Assist Australian industry in forming strategic joint ventures or alliances with offshore companies. * Facilitate contractor and subcontractor alignment with the policy, by including our AIP requirements in all contracts and purchase orders and make it a condition that these are reflected in all subcontracts and contractor placed purchase orders.

* Ensure that Australian design, engineering, manufacturing, construction and project management capabilities are considered when preparing scopes of work to enhance Australian industry opportunities, without impacting on the Gorgon Project’s safety, environment, reliability, quality, cost or schedule objectives. * Establish a supplier diversity program and work with regional organizations, indigenous organizations and ICN to establish links between the Gorgon Project and local business, including a capability register and capacity building activities. * Establish a measurement system to track and report the extent to which local content is utilized.”(Colin Beckett)

This policy along with the Gorgon Project Australian Industry Participation Plan makes sure that the Gorgon Project meets its promises and responsibilities not only to the State but to the Commonwealth Governments pertaining to the Barrow Island Act 2003 and Infrastructure Project Agreement.

(Colin Beckett) As I mentioned in the introduction one of the fundamental values of Chevron is to protect the environment and the people, to achieve results the right way. Since 2009 we have been following and will continue to follow precisely all the environmental policies. We implement environmental performance standards in order to decrease discharges and emissions, to control wastes and to protect natural resources.

Also through both the Australian Federal Government and the Western Australian State Government we employ severe environmental impact assessment and management process. We are determined to develop the Gorgon Project in a responsible manner, this is our world and our environment and we will work hard to protect it. (Chevron Australia) It is also extremely important to have a safe workplace. Safety is another of our main values and we make sure that our workplace is injury free through: * “Visible safety leadership across the business

* A commitment to behavioral-based safety observations through our Observing Safety Protects Resources, Environment and You Program * Successful strain and sprain management * Increased Operational Excellence (OE) through dedicated resources to high priority OE processes including: Managing Safe Work; Risk Management; Contractor, Health, Environment, and Safety Management; Compliance Assurance; and Fitness for Duty.” (Chevron Australia)

We have been working rigorously for 4 years to ensure that we follow all of these policies to protect the environment and the people, this is what we believe in and it’s very important to make sure there are no occurrences that could affect the environment or harm our people. * Recommendation- Trading Agreements

Now that we have successfully incorporated all the necessary policies, it is important to focus on the next step. By the end of 2014, the Gorgon Project will be ready to start fueling LNG throughout Australia and other nations. It’s essential that we have established trading agreements with our major trading partners who include China, Japan, United States, Republic of Korea, and Singapore.

The chart above is great because it shows the Top 5 Export and Import Markets, as well as Australia’s Top 5 two-way Trading Partners. A great benefit about LNG is that it can be easily exported by ship, which will make it easy to transport to different countries around the world.

Australia having “strong trade and economic links with Asia-Pacific countries” will also benefit the Gorgon Project “to take advantage of the growing opportunities in the region”.(Australian Department) Even though transporting LNG will not be difficult, tariffs placed in different nations will be an obstacle, these taxes will be a barrier for free trade between markets. My recommendation is to utilize the FTAs (Free Trade Agreements) already in force in Australia which include “ASEAN-Australia-New Zealand (AANZFTA): 2010, Chile (AClFTA): 2009, United States (AUSFTA): 2005, Thailand (TAFTA):

2005, Singapore (SAFTA): 2003, and New Zealand (ANZCERTA): 1983”. (Australian Government). As well as working towards enforcing the FTAs under negotiation which are “Australia-China FTA, Australia-Gulf Cooperation Council (GCC) FTA, Australia-India Comprehensive Economic Cooperation Agreement, Australia-Japan FTA ,Australia-Korea FTA, Indonesia-Australia Comprehensive Economic Partnership Agreement, Pacific Agreement on Closer Economic Relations (PACER) Plus, Regional Comprehensive Economic Partnership, Trans-Pacific Partnership Agreement.”

(Australian Government) Trade in Australia is essential; “in 2011, the value of Australia's trade with the world totaled more than $600 billion” (Australian Department). Australia has done a tremendous job already being a member of 7 FTAs, which is beneficial for the Gorgon Project and Australia’s Economy in general. But in order to take it to the next level and make the Gorgon Project extremely successful not only by supplying LNG to Australia but also to other developed and emerging economies, enforcing FTAs is essential. * Benefits of Policies and Trading

The benefits of utilizing environmental and safety policies will be that the Gorgon Project will continue to stay on track without any issues and will be ready to start fueling LNG by the end of 2014 as planned. The government, the community and we Chevron will be exceedingly satisfied.

The benefits of enforcing the FTAs that are still under negotiation will result in easy free trade between major trading partners. Australia already has FTAs with two of the top 5 two-way trading partners, the United States and Singapore, and there are FTAs under negotiation with China, Japan, and Korea which are also major partners.

“Australia has an export-oriented economy, with a strong focus on minerals and energy” (Australian Department) which is also beneficial to the Gorgon Project. “Australia's exports are equivalent to more than 21 per cent of our Gross Domestic Product building the nation's wealth and prosperity” (Australian Department), by enforcing more FTAs, exporting to other nations will facilitate. Other important benefits that will result from trading LGN in other nations include creating more jobs, and generating economic growth. * Conclusion

“The Gorgon Project will be a milestone in the economic growth of Australia in the next 40 years, fueling energy to Australia and its trading partners around the world.”(Chevron Australia) In conclusion I strongly believe that if we continue to follow the environmental and safety policies, as well as working towards enforcing more FTAs with Australia’s major partners, the Gorgon Project will successfully reach its goals. Providing thousands of jobs as well as creating economic growth for many years.

References Andrew Beatty, Ilona Millar, Megan Flynn (2010). The Gorgon Project: Legal and Policy Issues . [ONLINE] Available at: http://captureready.com/en/Channels/Research/showDetail.asp?objID=163. [Last Accessed 12 Feb 2013]. Australian Department of Foreign Affairs and Tarde (2012). TRADE MATTERS 2012 Australia-trading with the World. [ONLINE] Available at: http://www.dfat.gov.au/tradematters/. [Last Accessed 12 Feb 2013]. Australian Government- Department of Foreign Affairs and Trade (e.g. 2011). Australia's Trade Agreements. [ONLINE] Available at: e.g. http://www.microsoft.com. [Last Accessed 12 Feb 2013]. Chevron Australia (2009).

Injecting Billions of Dollars Across Australia. [ONLINE] Available at: http://www.chevronaustralia.com/ourbusinesses/gorgon.aspx. [Last Accessed 12 Feb 2013]. Chevron Australia (2011). Gorgon Project Overview - Producing Liquefied Natural Gas in Australia. [ONLINE] Available at: http://www.youtube.com/watch?v=wsWJHbMTZ9k. [Last Accessed 12 Feb 2013].

Colin Beckett (2009). Australian Industry Participation (AIP) Policy . [ONLINE] Available at: http://www.chevronaustralia.com/Libraries/Chevron_Documents/Gorgon_AIP_Policy.pdf.sflb.ashx. [Last Accessed 12 Feb 2013]. Media Statements (2009). Ground Breaking Ceremony Marks Start of Gorgon Construction . [ONLINE] Available at: http://www.chevronaustralia.com/media/mediastatements.aspx?NewsItem=cb304533-713d-47a9-af13-bbcb6241e63f. [Last Accessed 12 Feb 2013]. Pipeline Publications Australia (2011). Gorgon and Wheatstone on track in 2011: Chevron. [ONLINE] Available at: http://pipeliner.com.au/. [Last Accessed 12 Feb 2013].