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Chubu Electric takes stake in Gorgon
December 17, 2009
from AAP
Japan's Chubu Electric has signed a long-term offtake agreement for natural gas from the $43 billion Gorgon project, and has bought into the development.
Chubu signed a long-term sale and purchase agreement for 1.44 million tonnes of liquefied natural gas (LNG) per annum for 25 years.
The Australian government has estimated two separate Gorgon gas deals to sell a total of 2.475 million tonnes per annum for 25 years could generate $70 billion in exports.
The Japanese company also will buy a 0.417 per cent stake in the project from operator Chevron Australia Pty Ltd.
Chevron Australia Managing Director Roy Krzywosinski welcomed Chubu Electric as a foundation customer and participant in the Gorgon Project.
"Chubu Electric has been a strong supporter of Gorgon for many years," Mr Krzywosinski said.
"I am pleased to see this relationship culminate in this major, long-term LNG sales contract.
"We also welcome Chubu Electric as an equity partner in Gorgon and look forward to their ongoing participation in the project," he said.
Major stakeholders in Gorgon include Chevron Australia, which will own about 47 per cent of the joint venture following the Chubu deal, ExxonMobil, with 25 per cent equity, and Shell, also with a 25 per cent stake.
Two other Japanese companies which signed off-take agreements recently purchased a combined 2.25 per cent interest in Gorgon from Chevron.
The initial Gorgon Project development will include a three-train, 15 million-tonne-per-annum LNG facility and a domestic gas plant.
The Gorgon project is located at Barrow Island, about 130km off Western Australia's north west coast.
Gorgon's gas fields are believed to hold 40 trillion cubic feet of LNG, one quarter of Australia's known gas reserves.
The latest deal brings to three the number of binding long-term sales and purchase agreements to buy Gorgon gas.
Deals with Osaka Gas, Tokyo Gas and GS Caltex are signed to deliver a total of three million tonnes per annum (mtpa), while a heads of agreement has been signed to sell Korea Gas Corporation 1.5mtpa.
RBS analyst Johannes Faul said the latest deal indicated Chevron was concentrating its efforts on the Gorgon joint venture ahead of its Wheatstone LNG project, also offshore from WA.
"Chevron is obviously selling down small percentages to foundation parties at Gorgon, but massively at Wheatstone," Mr Faul said.
Chevron has sold down 11.25 per cent of Wheatstone to TEPCO (Tokyo Electric Power Company), a further 16.25 per cent to the US-based Apache Corporation, and 8.75 per cent to a subsidiary of the Kuwait Foreign Petroleum Exploration Company.
"It probably gives you a bit of an indication which project Chevron would rather be involved in," Mr Faul said.
"It tells you they think Gorgon is more valuable, or maybe it is a timing issue.
"Gorgon is ahead of Wheatstone," he said.
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