July 27 (Bloomberg) -- Chevron Corp., the second-largest U.S. energy company, agreed to sell Tokyo Electric Power Co. 3.1 million metric tons of liquefied natural gas annually from its proposed Wheatstone project in Western Australia.
The fuel will be supplied for as long as 20 years, San Ramon, California-based Chevron said in a statement today. The oil and gas producer is also in talks to sell a stake in the A$25 billion ($28 billion) venture to the Japanese utility known as Tepco as part of the accord, Chevron said.
In a preliminary agreement signed in December 2009, Chevron had said Tepco would buy 4.1 million tons of LNG a year and purchase an 11.25 percent stake in Wheatstone. Colin Barnett, premier of Western Australia, had at the time valued the fuel-supply contract at A$90 billion.
Chevron calls the Wheatstone project and its A$43 billion Gorgon LNG development in Australia the “centerpieces” of its expansion plans. A final investment decision for Wheatstone remains on schedule for 2011, it said today. The environment regulator of Western Australia last month recommended approval for the venture with “stringent conditions.”
Chevron and Woodside Petroleum Ltd. are among suppliers of Australian LNG that may benefit as countries put plans to build nuclear reactors on hold after the March 11 earthquake and tsunami crippled Tepco’s Fukushima Dai-Ichi atomic power plant, analysts including Deutsche Bank AG’s John Hirjee have said.
Wheatstone will initially produce 8.9 million tons of LNG a year when it starts in 2016, Chevron said in March. The project may eventually have as many as six units producing 25 million tons of LNG annually, the company said last year.
Royal Dutch Shell Plc, also a Gorgon partner, agreed earlier this year to acquire an interest in Wheatstone. That transaction left Chevron with 73.6 percent of the project and gave The Hague-based Shell 6.4 percent. Apache Corp. has 13 percent and Kuwait Foreign Petroleum Exploration Co. 7 percent.
Apache and Kuwait’s state-owned oil company agreed in 2009 to supply natural gas to Wheatstone in exchange for stakes in the venture.
Chevron has initial agreements to sell Wheatstone LNG to Kyushu Electric Power Co. and Korea Gas Corp. Kyushu also intends to become a stakeholder, according to Chevron’s website.
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