Chevron signs a 20-year deal to ship LNG

A major Japanese electric company will buy 1 million tons of liquefied natural gas per year from a massive Chevron project in Australia, in a 20-year deal announced Thursday.

Chubu Electric Power is one of the world’s largest customers for LNG, with a previous 25-year agreement to buy 1.44 million tons per year from another Chevron project in Australia, called Gorgon.

Chubu also has an agreement with a new export terminal planned in Freeport, Texas.

Through the agreement with Freeport LNG, Chubu and another Japanese company would combine to take up to 4.4 million tons per year of LNG from the United States. The Freeport project is still awaiting a permit to export natural gas to countries with which the United States does not have a free trade agreement.

The new Chevron deal will give the massive Wheatstone development another major customer in Asia as it prepares to begin shipping natural gas from the site in 2016.

Wheatstone, located in western Australia, will be able to ship 8.9 million tons per year when it starts up, but could expand to 25 million tons per year.

More than 80 percent of Chevron’s equity LNG from Wheatstone is covered under long-term off-take agreements with customers in Asia,” said Roy Krzywosinski, managing director of Chevron’s Australia subsidiary. “The agreements demonstrate that Wheatstone is well-placed geographically to meet the Asia Pacific region’s growing demand for a safe, reliable and cleaner-burning source of energy.”

Wheatstone is a joint venture between Chevron, which holds a 64 percent stake in the development, Apache Energy, which has a 13 percent interest, Kuwait Foreign Petroleum Exploration Company, with a 7 percent stake, Shell, with a 6.4 percent interest, and Kyushu Electric Power Company, which has a 1.46 percent holding in the project.

Japan has become a major customer of LNG after the Fukushimia-Daiichi nuclear meltdown and disaster that inspired a shift away from nuclear power plants and toward natural gas.