Tepco in Talks With Japan Firms to Buy Chevron LNG Project Stake

Tokyo Electric Power Co. (9501) said it is in talks with three Japanese companies to jointly invest in Chevron Corp. (CVX)’s Wheatstone natural gas project in Australia.

The electricity producer has held discussions with Mitsubishi Corp. (8058), Nippon Yusen K.K. and state-owned Japan Oil, Gas and Metals National Corp., Naoyuki Matsumoto, a spokesman for the utility known as Tepco, said by telephone from Tokyo today. He declined to give details of the proposed investment.

The four companies are considering purchasing a $4.35 billion stake in the Wheatstone liquefied natural gas project, two people with direct knowledge of the negotiations said, asking not to be identified because the talks are private. The group may buy a 10 percent stake in the gas fields and an 8 percent interest in the venture’s LNG facilities, they said.

The plan to jointly invest in Wheatstone was first reported by the Nikkei newspaper today.

The A$29 billion ($29 billion) Wheatstone project is among several Australian LNG projects aiming to meet rising Asian demand led by Japan as the country ramps up thermal-power generation after the Fukushima disaster shut all its nuclear stations. Tepco, owner of the crippled Fukushima Dai-Ichi atomic plant, invited the other Japanese companies to join it as it deals with the costs of last year’s accident.

In a preliminary agreement signed in December 2009, Chevron had said Tepco intends to acquire 15 percent of the second- largest U.S. oil company’s equity in the Wheatstone field and an 11.25 percent interest in the venture’s LNG processing facilities to be developed onshore near Onslow in Western Australia state.

Negotiations Ongoing

Tepco is still in negotiations with Chevron, spokesman Matsumoto said, declining to elaborate.

Chevron doesn’t comment on speculation, the company’s Australian unit said today in an e-mail statement.

“Discussions with Wheatstone customers are ongoing,” it said.

Tepco and Mitsubishi may spend $70 million and $330 million respectively to acquire 8 percent and 40 percent stakes in a venture that will obtain the interest in the Australian gas field, one person said. Nippon Yusen and state-owned Jogmec may invest $90 million and $350 million, while the Japan Bank for International Cooperation may buy preferred shares without voting rights in the venture for $280 million, the person said.

JBIC may also lend about $2 billion to the venture, while private banks may lend $1.3 billion, the person said.

“We are considering investing in the project” and a decision has yet to be made, Kazuhiko Uematsu, a spokesman for Jogmec, said by telephone today. “We can’t comment beyond that because we are still in talks with private companies.”

Mitsubishi spokesman Shunsuke Nanami declined to comment.

To contact the reporters on this story: Tsuyoshi Inajima in Tokyo at tinajima@bloomberg.net; Ichiro Suzuki in Tokyo at isuzuki@bloomberg.net

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

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