) has entered into yet another deal regarding the Wheatstone
Project in western Australia. This time, the domestic arm of
Chevron inked binding agreements with Japanese utility firm Tokyo
Electric Power Company, or TEPCO.
Per the terms, Chevron will sell additional 0.4 million tons of
liquefied natural gas (LNG) annually from the aforesaid project for
nearly the next 20 years to TEPCO. The deal also involves the sale
of a 10% participating interest in the Wheatstone field licenses
and 8% stake in the Wheatstone natural gas processing facilities by
Chevron to TEPCO.
However, none of the companies have divulged the financial
aspects of the transaction.
Combining the recent deal with the previously announced
agreements, TEPCO's total LNG offtake from the Wheatstone project
reached 4.2 millions tons per annum (MTPA).
Located about 7.5 miles west of Onslow, off Western Australia's
Pilbara coast, Wheatstone is one of the country's most ambitious
resource projects. The venture is proposed to be built with an
annual output capacity of 25 million metric tons of LNG.
The initial phase of the project will see the construction of
two processing units, known as trains, with a combined capacity of
8.9 million tons of LNG a year and a domestic gas plant. The
Wheatstone project is expected to come online by 2016.
Chevron acts as the operator of the project and is partnered by
), Kuwait Foreign Petroleum Exploration Co.,
Royal Dutch Shell plc
) and Kyushu Electric.
Over the last one year, Chevron and partners have entered into
multiple deals with Japanese and South Korean companies to sell a
major portion of LNG from the project. Currently, more than 80% of
Wheatstone's LNG is under long-term contracts with customers.
We believe that the Wheatstone project, coupled with the other
billion-dollar Gorgon venture, will contribute immensely in
providing considerable economic benefits such as employment,
government revenue and local business opportunities across
Australia. Both the ventures, upon completion, will hold a
leadership position among natural gas and LNG suppliers in the
We maintain our long-term Neutral recommendation on Chevron
shares. The company currently retains a Zacks #3 Rank (short-term
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