On June 16, Chevron's (CVX 0.44%) Angola LNG plant, one of the largest liquefied natural gas processing facilities in Africa, shipped its first cargo after major delays.

Initial production of LNG at the plant, operated by Cabinda Gulf Oil, a unit of Chevron, was sold to state-owned Sonangol EP to be shipped to Brazil, according to the CEO of Angola LNG Marketing. Production at the facility, which has a capacity of 5.2 million metric tons a year, had previously been delayed due to fires, pipeline failures, and labor shortages.

"First gas at Angola LNG is an important milestone in support of our strategic plan to grow our production," said Chevron vice chairman George Kirkland in a company press release. "This project will commercialize natural gas resources in western Africa to meet growing demand in the region and internationally."

Angola LNG
The $10 billion project will collect and transport natural gas from offshore Angola to an onshore liquefaction plant on the coast near the Congo River, the company said in a statement. It has the capacity to produce 5.2 million metric tons of LNG per year, 63,000 barrels per day of natural gas liquids for export, and 125 million cubic feet of natural gas per day for domestic consumption. 

The project plans to use associated natural gas produced from existing crude oil operations, as well as new non-associated gas from other offshore fields. In addition to supporting continued offshore oil development, it is expected to help reduce natural gas flaring and greenhouse gas emissions from offshore producing areas, the company said.

Chevron is Angola LNG's biggest shareholder, commanding a 36.4% stake, followed by Sonangol, which has a 22.8% interest in the project. BP (BP 0.13%), Total (TTE -0.32%), and Italy's Eni account for the balance, each holding 13.6%.

Production growth
Considering that the world LNG market is projected to remain tight over the next few years, with very limited new LNG capacity expected, the first shipment of production from Angola LNG couldn't have come at a better time for Chevron.

Chevron, like most of the large integrated oil companies, has struggled to boost production. However, in the first quarter this year, the company managed to grow total oil and gas production by a relatively impressive 0.8%. Compare that to ExxonMobil (XOM 0.02%), which reported a 3.5% year-over-year decline in production, and ConocoPhillips (COP -0.43%), which said production fell 3% from a year earlier.

Chevron, whose U.S. oil production came in flat year over year and international production fell 2.5% to 1.3 million barrels a day in the first quarter, would have suffered a similar fate were it not for the strength of its natural gas business, which proved to be its saving grace, delivering a 3.2% year-over-year increase in first-quarter sales.  

What's next?
Chevron plans to more aggressively direct its efforts toward LNG. Through its various LNG ventures, the company plans to boost total production by 20% through the end of 2017. In addition to its Angola LNG project, Chevron has two LNG projects in Australia, as well as a 50% interest in the proposed Kitimat LNG terminal in Canada.

With global LNG demand forecast to exceed output by the end of this decade and with demand for LNG expected to grow at an average rate of 15 million tons a year through 2025, Chevron appears to have solidified a first-mover advantage in the promising African region that should serve it well for years to come.