Kyushu signs Gorgon, Wheatstone deals

Chevron has today signed more deals with a Japanese utility for the delivery of liquefied natural gas and equity stakes in its Gorgon and Wheatstone projects off the coast of Western Australia.

Under the heads of agreements, Kyushu Electric Power Co will receive 0.3 million tonnesof LNG each year from the $43 billion Gorgon project for 15 years.

As part of the deal, Kyushu Electric will also acquire a 1.83 percent of Chevron's equity share in the Wheatstone field licenses and a 1.37 percent interest in the Wheatstone natural gas processing facilities to be developed onshore near Onslow in northwestern Australia.

Additionally, Kyushu Electric expects to purchase 0.7mtpa of LNG from the Wheatstone project for up to 20 years. This sales volume is net of the LNG that Kyushu Electric will lift as an equity participant in Wheatstone.

Including this equity participation, Kyushu Electric will take delivery of 0.8mtpa of LNG from the Wheatstone Project.

Chevron Australia managing director Roy Krzywosinski said the Kyushu Electric agreements provide both increased momentum for the Wheatstone project and an important customer for the Gorgon project.

"We look forward to expanding our long-standing relationship with Kyushu Electric as we progress the Gorgon and Wheatstone natural gas projects," he said.

Chevron Asia Pacific exploration and production president Jim Blackwell said, "The agreements with Kyushu Electric further demonstrate our ability to attract large and experienced LNG buyers as we develop these two legacy gas projects in Australia."

Construction of the Gorgon Project began in the second half of 2009, with first gas planned for 2014. The initial project design includes a 15mtpa LNG facility and domestic gas plant on Barrow Island in northwestern Australia. Chevron is the operator and has an approximate 47 percent interest in the Project.

The Wheatstone project entered the front-end engineering and design phase in July 2009 and expects to make a final investment decision in 2011.

Plans for the initial phase of the project include facilities with the capacity to process 8.6mtpa of LNG and a domestic gas plant at Ashburton North, south of Onslow in Western Australia. Chevron is the operator and holds an approximate 75 percent interest in the project.

In October 2009, Chevron announced it had signed a binding agreement with Apache Julimar Pty Ltd, a subsidiary of the Apache Corporation, which will assume a 16.25 percent equity interest in the Wheatstone Project, and KUFPEC Australia (Julimar) Pty Ltd, a subsidiary of the Kuwait Foreign Petroleum Exploration Company k.s.c., which will assume an 8.75 percent interest in the project. Under this agreement, Chevron is responsible for marketing LNG produced from the Julimar and Brunello fields.