UPDATE 2-Chevron's Gorgon gets state environment OK

(Recasts with company confirmation, adds details)

By Fayen Wong

SYDNEY, Sept 7 (Reuters) - Chevron (CVX.N) said on Friday it has received final approval from the Western Australian state government for its multi-billion dollar Gorgon liquefied natural gas (LNG) project, removing a major hurdle.

Confirming an earlier Reuters report, Chevron said the approval came with stringent conditions, which the project partners, Exxon Mobil (XOM.N) and Royal Dutch Shell Plc (RDSa.L) (RDSb.L), were reviewing as they finalise project details.

Chevron, the third-largest U.S. oil company by market value, still needs Australian national government approval before the project can start.

It also said its key Japanese customers, including Tokyo Gas (9531.T), Chubu Electric Power (9502.T) and Osaka Gas (9532.T), could take minority equity in the Gorgon project.

"We are working with three Japanese customers and there are provisions for equity participation as well as the purchase of LNG (from Gorgon)," Jay Johnson, managing director of Chevron Australia, told reporters on the sidelines of the Asia-Pacific Economic Cooperation meeting in Sydney.

Johnson declined to comment when asked about the cost of the project, saying that the joint venture partners were still finalising details and it would be premature to give an estimate.

Industry analysts have suggested that construction costs for Gorgon, which contains 40 trillion cubic feet of gas resources, could double to A$20 billion ($17 billion) from Chevron's estimate of A$11 billion three years ago.