Presenting the US oiler's quarterly results on Friday, Watson said Chevron was comfortable with selling around 85% of the gas from Wheatstone and Gorgon under contract.

 

He said that while there was some weakness on the demand side of the market, environmental objectives in Asia were encouraging for the long-term trend.

 

"By 2025 or so people are looking at demand increases that could be 65% or more. So it's a good story," he said.

 

However, he said it was too early to start making decisions about where that demand might be met from.

 

"I don't think we're yet at the place where you're going to see a lot of FID is taken on new projects but it's been encouraging to see a bump up in prices," he said.

 

Watson said discussions had been held about developing Kitimat with Woodside, one of a number of stalled Canadian LNG developments, and for Gorgon train 4, which was formally placed on hold several years ago as costs for the three approved trains on Barrow Island ballooned.

 

"I would say the most likely - you need to underpin a project like Kitimat with some type of contract and off-take and I don't want to represent that we're very far along in those discussions," Watson said. 

 

"We've been looking at different concepts for an LNG plant to be able to put one in more efficiently."

 

Woodside said recently said it was working with Chevron's design team in evaluating potential project delivery cost reductions by using Woodside's NextGenTechnology.

 

Drilling at the La Jolie area in the Liard Basin, where appraisal wells now extend some 7000m, slowed down last year, but have been considered highly encouraging.

 

"We're proving up the resource side which is encouraging up in the Liard and Horn River area and of course we've done some work on pipeline. But I don't want to advertise, that's moving real quickly primarily because of the economic side."

 

For Gorgon Train 4, Watson said Chevron wanted to see the initial three trains performing smoothly for some time, allowing debottlenecking and re-rating, before it would want to even think of expanding the plant, which is understood to be the most costly LNG development in the work.

 

He said a similar philosophy would hold true for the Wheatstone project, where Woodside is also a partner.

 

Wheatstone Train 1 is expected to come online by mid-year, with Train 2 by early 2018.

 

Watson said the company wanted to get the best performance out of its hardware, and would only make any expansion decisions once the market was supportive, but the company does have a strong resource base in Australian waters to develop.

 

Watson's words came as BP released its annual energy outlook, predicting that the global LNG sector will grow seven times faster than pipeline gas trade and is expected to account for around half of all globally traded gas by 2035, up from 32% today.

 

"The significance of the growing importance of LNG-based trade is that, unlike pipeline gas, LNG cargoes can be redirected to different parts of the world in response to regional fluctuations in demand and supply. As a result, gas markets are likely to become increasingly integrated across the world," the report said.

 

BP expects Australian LNG supplies are likely to be absorbed within Asia while US LNG exports are likely to be more diversified, providing the marginal source of gas for markets in Europe, Asia and South and Central America.

 

"The development of a deep and competitive LNG market is likely to cause long-term gas contracts to be increasingly indexed to spot LNG prices," the report found.

 

Global LNG supplies are expected grow strongly between now and 2035, led by growth in the US (19Bcfpd) and Australia (13Bcfpd), the report notes.

 

BP said in the report that there is a risk that a second wave of LNG supply growth will be slow to materialise, causing a temporary period of tightness within LNG supplies.