TEPCO AGREES TO AUSTRALIA’S LARGEST EVER DEAL!

Tokyo Electric Power Co. (TEPCO), Inc. recently initialled Heads of Agreements with Chevron Australia Pty Ltd. and Chevron Pty Ltd. to acquire an equity interest in and LNG offtake from the Wheatstone LNG Project. TEPCO anticipates receiving up to 4.1 million tons per annum (mtpa) of LNG from the Wheatstone LNG Project, in what is being called the largest single contract ever signed in Australia’s history.

Chevron Corporation, which holds petroleum titles for offshore areas in North West Australia where the Wheatstone and Iago gas fields are located, first announced plans to develop the Wheatstone LNG Project in March 2008, and TEPCO approached Chevron soon after. The Wheatstone LNG Project is planned as an integrated LNG project, including offshore natural gas production and gathering as well as processing and delivery of LNG at an onshore site at Ashburton North on the coast of Western Australia. Plans call for building an LNG plant with a capacity of 8.6 mtpa, which is anticipated to commence operation between in 2016 and 2018.

The parties have agreed to the basic terms and conditions for the sale and purchase of LNG, and for TEPCO to purchase a 15% equity interest in the Chevron petroleum titles covering the gas fields which will feed the Wheatstone LNG Project. TEPCO’s equity interest will also include an overall 11.25% participating interest in the Wheatstone LNG Project. TEPCO anticipates lifting approximately 1.0 mtpa of LNG from its equity interest in the project, and purchase an additional 3.1 mtpa of LNG produced at the Wheatstone LNG Project from Chevron.

For TEPCO, Asia’s largest utility company, the total offtake of 4.1 mtpa will be one of its largest long-term LNG offtake arrangements, equivalent to more than 20% of its annual consumption of LNG. This latest contract is for up to 20 years and covers almost half of Wheatstone’s initial capacity of 8.6 million tonnes of LNG a year.

The Wheatstone project will bring new development to Onslow by becoming the foundation proponent for a deep-water port and an 8,000ha strategic industrial estate at Ashburton North.