Chevron has announced that Chubu Electric Power Co. of Japan has signed a binding agreement to purchase 1 million tons of LNG annually from the Wheatstone project in Australia for up to 20 years.
Wheatstone is a joint venture owned by Chevron (64.14%), Apache Energy Ltd. (13%), Kuwait Petroleum Corp. (7%), Royal Dutch Shell Plc. (6.4%), Kyushu Electric Power Co. (1.64%) and PE Wheatstone Pty Ltd., which is partly owned by Tokyo Electric. The Chevron-operated Wheatstone project, in Western Australia, will eventually have an 8.9 million-ton annual LNG capacity with two LNG trains and a gas plant. Wheatstone will begin supplying LNG in 2016.
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The deal means that more than 80% of Chevron’s equity LNG from Wheatstone is already covered under long-term purchase agreements with Asian customers. It also signals that the Wheatstone project has solidly demonstrated its geographical status and market capacity to supply Asia customers.
Chevron (NYSE: CVX) is very well-positioned here. Overall, it holds an 80.17% equity interest in Wheatstone, as well as in the fields that provide 80% of the project’s gas.
Japan—the world’s largest LNG importer—bought 87.3 million tons of LNG last year alone, with its utilities boosting demand for thermal power generation in the wake of Fukushima.
By. Charles Kennedy of Oilprice.com