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Chevron signs $90bn LNG deal with Tokyo Electric Power
Published 6:04 AM, 7 Dec 2009 Last update 3:14 PM, 7 Dec 2009
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By a staff reporter, with Reuters
US oil giant Chevron Corp has secured the largest LNG supply agreement yet to be made in the Australian market, with a $90 billion supply agreement struck with Tokyo Electric Power Company (TEPCO) for its Wheatstone liquified natural gas (LNG) project.
According to the agreement, the Japanese utility will take an annual delivery of 4.1 million tonnes of LNG for up to 20 years from Wheatstone and a 15 per cent equity stake in the licences covering the project.
TEPCO will also take an 11.25 per cent interest in the gas processing plant to be developed by Chevron onshore near Onslow in north-western Australia.
The two parties have not disclosed the value of the agreement but deal is reportedly worth $90 billion, according to energy experts.
The Nikkei business daily said on Sunday that TEPCO's investment was in excess of ¥300 billion yen ($A3.61 billion).
"The report mentioned a specific amount of investment, which was not presented by us but based on (Nikkei's) own calculation," TEPCO said in a statement.
"We don't have anything that can be shown at the moment."
Western Australia state Premier Colin Barnett said on Saturday that the sales contract amounts to some $90 billion.
"In my judgement that would be the largest sales contract for any Australian export industry – this is an historic agreement, " Mr Barnett said.
Chevron declined to comment on the value.
A show of confidence
Chevron Australia managing director Roy Krzywosinski told The Australian that the deal was another positive step for Wheatstone, which is set to go for final development approval in 2011, with production expected in 2016.
"For Wheatstone it's all good news – we've got the gas, we've now got the market and we've got partner alignment to move the project forward," he said.
Chevron Global Upstream and Gas executive vice president George Kirkland said that TEPCO’s involvement highlighted the prospects of the project.
"We are pleased to welcome TEPCO as a foundation customer and equity partner in the Wheatstone project as we move the development forward. This (agreement) further demonstrates that Wheatstone is well positioned to deliver energy to the Asia-Pacific region," Mr Kirkland said.
"TEPCO is among the most experienced LNG buyers in the world (and) their commitment to secure long-term LNG supplies from Wheatstone is a strong demonstration of their confidence in Chevron and represents another important step forward for the project."
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