Chevron Signs Multiple LNG Deals with Kyushu Electric

Chevron Corporation (CVX) today announced that its Australian subsidiaries have signed multiple Heads of Agreements (HOAs)with Kyushu Electric Power Co., Inc. for the delivery of liquefied natural gas (LNG) from the Chevron-operated Gorgon and Wheatstone natural gas projects.

Under the agreements, Kyushu Electric anticipates receiving 0.3 million tons per annum (mtpa) of LNG from the Gorgon Project, for 15 years.

Under the agreement, Kyushu Electric also intends to acquire 1.83 percent 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. Additionally, Kyushu Electric expects to purchase 0.7 mtpa of LNG from the Wheatstone Project for up to 20 years. This sales volume is net of the LNG that Kyushu Electric will lift as an equity participant in Wheatstone. Including this equity participation, Kyushu Electric will take delivery of 0.8 mtpa of LNG from the Wheatstone Project.

"We are pleased to welcome Kyushu Electric as a gas customer for our Gorgon and Wheatstone projects and equity holder in Wheatstone," said Jim Blackwell, president, Chevron Asia Pacific Exploration and Production Company.

John Gass, president, Chevron Global Gas said, "Kyushu Electric is a leading company in one of the world's largest LNG markets. We already have a long-standing relationship with Kyushu Electric through our participation in the North West Shelf Venture, and we look forward to expanding this relationship through our two new major Australian LNG projects."

Construction of the Gorgon Project began in the second half of 2009, with first gas planned for 2014. The initial project includes a 15 mtpa LNG facility and a domestic gas plant 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. The initial phase of the project plans to have the capacity to process 8.6 mtpa of LNG and a domestic gas plant. Chevron is the operator and holds an approximate 75 percent interest in the project.

In October 2009, Chevron announced it had signed a binding agreement with Apache Julimar Pty Ltd, a subsidiary of the Apache Corporation, which will assume a 16.25 percent equity interest in the Wheatstone Project, and KUFPEC Australia (Julimar) Pty Ltd, a subsidiary of the Kuwait Foreign Petroleum Exploration Company k.s.c., which will assume an 8.75 percent interest in the project. Under this agreement, Chevron is responsible for marketing LNG produced from the Julimar and Brunello fields.

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