10/09/2009 - 12:41

Chevron in big gas deals for Gorgon

10/09/2009 - 12:41

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Chevron has secured three new offtake deals for its Gorgon gas project with Japanese and South Korean companies, which Prime Minister Kevin Rudd claims are valued at more than $70 billion.

Chevron has secured three new offtake deals for its Gorgon gas project with Japanese and South Korean companies, which Prime Minister Kevin Rudd claims are valued at more than $70 billion.

The US oil and gas major announced today it had entered three binding offtake agreements to supply nearly three million tonnes of gas each year, for at least 20 years, when the operation starts in the second half of 2014.

Chevron did not attribute a dollar value to the deals.

However Mr Rudd said in parliament today the value of the offtake agreements was more than $70 billion, topping project partner ExxonMobil's recent offtake deal with PetroChina, which had been valued at $50 billion by federal Resources Minister Martin Ferguson.

Last month, ExxonMobil agreed to supply PetroChina with 2.25 million tonnes of Gorgon gas each year over 20 years.

Under the Chevron deals announced today, the company will supply 1.375mt of liquefied natural gas each year to Osaka Gas and 1.1mt a year to Tokyo Gas for 25 years.

Additionally, both Japanese utilities have agreed to buy an equity share in the project, with Osaka Gas to acquire a 1.25 per cent interest and Tokyo Gas to purchase a 1 per cent stake.

Details of the equity sale have not been disclosed.

The purchase of the equity stakes, subject to relevant approvals, will reduce Chevron's interest in Gorgon to 47.75 per cent. Other partners in Gorgon are ExxonMobil (25 per cent) and Shell (25 per cent).

Meantime, South Korean energy company GS Caltex Corporation will buy 500,000 tonnes of LNG each year for up to 20 years, with the gas to be supplied by Gorgon and other projects in Chevron's portfolio.

GS Caltex is 50 per cent owned by Chevron.

Chevron Australia managing director Roy Krzywosinski welcomed the deals as a key step towards a final investment decision on the project expected in the coming weeks.

It has been speculated the decision will be announced on September 14.

 

 

The announcement is below:

 

Chevron has announced that it has entered into three binding sale and purchase agreements (SPAs) for nearly 3 million tonnes per annum of liquefied natural gas (LNG) into Japan and South Korea, the world's two largest LNG import markets. It has also signed two SPAs for the sale of equity in the Gorgon Project. Financial details of the LNG and equity SPAs were not disclosed.

Chevron Australia has signed binding LNG SPAs with Osaka Gas and Tokyo Gas for LNG supply from the Gorgon Project, commencing in the second half of 2014 for 25 years. Chevron will supply Osaka Gas with 1.375 million tonnes per annum (MTPA) of LNG and Tokyo Gas with 1.1MTPA of LNG.

Both Japanese utility companies are also purchasing from Chevron an equity share in the Gorgon Project. Osaka Gas is purchasing 1.25 per cent and Tokyo Gas is acquiring a 1 per cent interest. Both agreements are subject to Australian Foreign Investment Review Board approval.

In addition, Chevron Australia Pty Ltd and Chevron International Gas Inc. have signed separate SPAs with GS Caltex Corporation, a major South Korean energy company. Chevron will supply GS Caltex with 0.5mtpa of LNG for up to 20 years.

The LNG to GS Caltex will be supplied from the Gorgon project and from other system gas within the global Chevron portfolio. GS Caltex is 50 percent owned by Chevron.

Chevron Australia Managing Director Roy Krzywosinski welcomed the SPAs as a key step towards a final investment decision on the Gorgon Project expected in the coming weeks.

"We are pleased to welcome Osaka Gas and Tokyo Gas both as foundation customers, as well as equity participants, in the Gorgon Project. These companies have a long history in the LNG industry and these SPAs build on the strong relationships we already enjoy with both companies," Krzywosinski said.

John Gass, president, Chevron Global Gas added, "These agreements represent a significant milestone in Chevron's efforts to commercialize our equity natural gas and grow our LNG business. The agreement with GS Caltex enhances Chevron's strong position in South Korea, where GS Caltex is a leading oil refiner, with substantial petrochemical, power and city gas operations."

Chevron expects further sales of Gorgon LNG to be executed in the coming months.

The Gorgon Project is operated by the Australian subsidiary of Chevron (50 percent) in joint venture with Australian subsidiaries of ExxonMobil (25 percent) and Shell (25 percent). The project's scope includes three, five million tonne per annum LNG trains; an underground carbon dioxide injection project expected to be the world's largest; and a domestic gas plant.

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