Australian subsidiaries of Chevron Corp. and Apache Corp. and their partners have agreed to sell liquefied natural gas (LNG) from the under construction Chevron-operated Wheatstone Project in Western Australia to Japan's Tohoku Electric Power Co. Inc.
The move is significant in that it could be one of the first signs of the shifting LNG transportation dynamic in the wake of the Fukushima nuclear power plant disaster in Japan in March 2011. The meltdown, which followed an earthquake and tsunami, put a cloud of distrust over nuclear power in Japan, which spurred the country to look at other options for power generation. Earlier this month, Japan, which is home to 50 nuclear power reactors, was nuclear power-free after the sole operating nuclear unit was shut down for planned maintenance.
Under the agreement announced on Monday, Chevron, Apache, Kuwait Foreign Petroleum Exploration Co. (KUFPEC) and partners are expected to deliver up to 1 million metric tons a year (MTPA) of LNG to Tohoku for up to 20 years.
Chevron Gas and Midstream President Joe Geagea said Tohoku has agreed to source a significant portion of its annual energy supply requirements from the Wheatstone Project, which "further highlights customers' confidence in Wheatstone as a safe, reliable energy source."
Roy Krzywosinski, managing director of Chevron Australia, added that more than 80% of Chevron's equity LNG from Wheatstone is now covered under long-term off-take agreements with customers in Asia. The Wheatstone partners earlier announced long-term agreements to sell LNG to Tokyo Electric Power and Kyushu Electric Power, as well as a heads of agreement with Chubu Electric Power.
"This off-take agreement for Wheatstone demonstrates our Australian LNG projects are in the right geographic location at the right time to meet Asia's rapidly growing demand for cleaner burning natural gas," said Krzywosinski.
Located at Ashburton North, 7.5 miles west of Onslow in Western Australia, the foundation phase of Wheatstone will consist of two liquefied natural gas trains with a combined capacity of 8.9 MTPA and a domestic gas plant.
The onshore foundation project is a joint venture between the Australian subsidiaries of Chevron (72.14%), Apache (13%), KUFPEC (7%), Royal Dutch Shell plc (6.4%) and Kyushu Electric (1.46%) (see Daily GPI, April 12, 2011). The Apache and KUFPEC subsidiaries will supply gas produced from the Julimar and Brunello fields, large gas accumulations discovered in 2007. Apache has a 65% interest in the upstream Julimar Development Project, which it operates.
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