KYUSHU ELECTRIC SIGNS WA GAS DEALS

Kyushu Electric Power Co., the Kyushu-headquartered electric power company, recently signed heads of agreement for the delivery of liquefied natural gas from the Gorgon project, and the delivery of liquefied natural gas and equity stakes in the Wheatstone project off the coast of Western Australia. Chevron, the lead partner in both projects, agreed to supply Kyushu Electric with 0.3 mtpa of LNG from the Gorgon liquefied natural gas development project for 15 years.

In addition, Kyushu Electric will also purchase a 1.83% of Chevron’s equity share in the Wheatstone field licenses, and a 1.37 percent interest in the Wheatstone natural gas processing facilities to be developed onshore near Onslow in northwestern Australia. Kyushu Electric expects to purchase 0.7 mtpa of LNG from the Wheatstone project for up to 20 years. Including the equity participation, Kyushu Electric will take delivery of a total of 0.8 mtpa of LNG from the Wheatstone Project.

Kyushu Electric supplies power to the island of Kyushu, covering the prefectures of Fukuoka, Nagasaki, Oita, Saga, Miyazaki, Kumamoto and Kagoshima. Kyushu Electric is the fourth Japanese company to sign contracts for gas supplies from the Gorgon project, and the second to buy gas supplies and take an interest in the Wheatstone project.

Chevron Australia managing director Roy Krzywosinski said the Kyushu Electric agreements provide both increased momentum for the Wheatstone project and an important customer for the Gorgon project. “We look forward to expanding our long-standing relationship with Kyushu Electric as we progress the Gorgon and Wheatstone natural gas projects,” he said.

Construction of the Gorgon Project began in the second half of 2009, with first gas planned for 2014. The initial project design includes a 15 mtpa LNG facility and domestic gas plant on Barrow Island in northwestern Australia. Chevron is the operator and has an approximate 47 percent interest in the project.

The Wheatstone project entered the front-end engineering and design phase in July 2009 and expects to make a final investment decision in 2011. Plans for the initial phase of the project include facilities with the capacity to process 8.6 mtpa of LNG and a domestic gas plant at Ashburton North, south of Onslow in Western Australia. Chevron is the operator and holds an approximate 75 percent interest in the project.