Chevron sold on Tuesday its 10 per cent stake in the Wheatstone liquefied natural gas (LNG) project in Western Australia to Tokyo Electric Power Company (Tepco) of Japan for $4 billion.
Chevron will also supply Tepco, which operated the damaged Fukushima Daiichi nuclear power plant, an additional 400,000 tonnes of LNG yearly sourced from the Wheatstone project. The supply agreement, which runs for 20 years, assured Tepco of a steady supply of LNG after the power firm veered away from nuclear power as main source of energy following the near nuclear disaster caused by the March 11, 2011 magnitude 9 earthquake and tsunami that shook Japan.
Tepco will also require an 8 per cent interest in the Wheatstone LNG processing facilities. It would boost the Japanese utility firm's total LNG off-take from Wheatstone to 4.2 million tonnes per annum (MTPA) from the 3.1 MTPA it agreed to purchase from the venture in 2011.
With the Tepco deal, over 80 per cent of Chevron's equity LNG from the $29-billion Wheatstone project is now covered by long-term take-off agreements with Asian buyers. The venture is slated to begin export of LNG in 2016.
Chevron has plans to expand Wheatstone's production to 25 MTPA from 8.9 MTPA.
"These agreements continue to demonstrate Wheatstone is well placed geographically to meet the Asia-Pacific regions' demand for a safe, reliable and cleaner-burning source of energy," 9 News quoted Chevron Australia Managing Director Roy Krzywosinski.
He downplayed the impact of competition from American shale LNG exporters.
"There are a lot of hurdles to get LNG exports from shale gas up and running in the U.S.... Some are political, some are technical and some are pricing. Our location here in Asia, the market demand continues to be strong for these types of conventional projects," The West quoted Mr Krzywosinski.
The Wheatstone project is tagged to become of the largest resources projects in Australia. Chevron Australia leads the development of the Wheatstone and Gorgon natural gas projects and managed its one-sixth interest in the North West Shell Venture. The global energy giant also runs Australia's largest onshore oilfield on Barrow Island and the Thevenard Island oilfields.