Credit: Shutterstock photoU.S. energy major Chevron Corp. ( CVX ) reported today that its Australian affiliate has entered into a deal with South Korea's SK LNG Trading Pte Ltd for the sale of liquefied natural gas ("LNG") from its Gorgon project.
Per the Sales and Purchase Agreement ("SPA"), Chevron will supply 4.15 million tons of LNG to SK LNG Trading for a period of five years, beginning 2017.
Chevron added that during the contract period, most of the LNG from the project - more than 75% - will be allotted to Asian customers. The project is expected to commence production this year.
Management at Chevron added that the LNG deal is an important move in the commercialization of its natural gas holdings in Australia and would enable the company to diversify its sales portfolio.
The Gorgon project will include an LNG plant with 3 processing units and has a capacity of 15.6 million metric tons of LNG per year. The project will also comprise a carbon dioxide injection project and a domestic gas plant. The Gorgon project involves development of the Gorgon Field and the Jansz-Io Field.
Chevron, with a 47.3% stake, is the operator of the Gorgon LNG project. Other major stakeholders in the joint venture include ExxonMobil ( XOM ) and Shell ( RDS.A ) each holding 25% interest. Aside from these, Osaka Gas, Tokyo Gas and Chubu Electric Power hold 1.25%, 1% and 0.417% stake respectively.
Chevron is also developing the Wheatstone LNG Project in Western Australia with a 64% stake. The facility will have an initial capacity of about 8.9 million metric tons per year of LNG.
Chevron currently holds a Zacks Rank #5 (Strong Sell).
A better-ranked player from the energy sector, Spectra Energy Partners, LP ( SEP ), sports a Zacks Rank #1 (Strong Buy).
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
