Chevron Agrees to Sell Stake in Wheatstone LNG Project to Shell

Chevron Corp. (CVX), the second-largest U.S. energy company, said Royal Dutch Shell Plc (RDSA) agreed to acquire a stake in its proposed A$20 billion ($21 billion) Wheatstone natural gas project in Western Australia.

Shell, Europe’s largest oil company, will gain 6.4 percent of the liquefied natural gas plants and 8 percent of the fields off northwest Australia that will supply the Wheatstone development, Chevron said in an e-mailed statement today. Financial terms weren’t disclosed.

Chevron has called the Wheatstone venture and the A$43 billion Gorgon LNG project the “centerpieces” of its global growth plans. The Hague-based Shell also owns 25 percent of Chevron-led Gorgon on Barrow Island, the largest of more than a dozen LNG projects in Australia and Papua New Guinea seeking to tap Asian demand for cleaner-burning alternatives to coal.

The Wheatstone venture initially will produce 8.9 million metric tons of the fuel a year from two processing units, or trains, when it begins in 2016, the company said last month. The project may have as many as six units and produce as much as 25 million tons of LNG annually, Chevron said last July.

Chevron plans to make a decision in the second half of this year to proceed with the project, it said today. Wheatstone is estimated by Deutsche Bank AG to cost A$20 billion.

Photographer: Tim Boyle/Bloomberg

Chevron Corp. Chief Executive Officer John S. Watson. Close

Chevron Corp. Chief Executive Officer John S. Watson.

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Photographer: Tim Boyle/Bloomberg

Chevron Corp. Chief Executive Officer John S. Watson.

Chevron now has 73.6 percent of the project, while Apache Corp. (APA) has 13 percent and Kuwait Foreign Petroleum Exploration Co. holds 7 percent. Apache and Kuwait’s state-owned oil company in 2009 agreed to supply gas to Wheatstone in exchange for stakes.

The San Ramon, California-based energy company plans to sell Wheatstone fuel to Tokyo Electric Power Co., Kyushu Electric Power Co. and Korea Gas Corp.

Chevron said in September it aimed to supply LNG to China National Petroleum Corp. and collaborate with the oil company on the development of gas fields as part of a preliminary pact.

To contact the reporter on this story: James Paton in Sydney jpaton4@bloomberg.net.

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net.

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