Pattern S.p.a (BIT:PTR)
Historical Stock Chart

From Nov 2019 to Nov 2024

Chevron Corp. (CVX) moved closer to a final decision on its proposed Gorgon liquefied natural gas project Thursday, after signing three binding sales agreements to supply nearly 3 million tons a year of LNG from the Australian field to Japanese and Korean energy companies.

In a statement, Chevron said Japan's Osaka Gas Co. Ltd. (9532.TO) will buy 1.375 million metric tons annually, or mtpa, of LNG commencing in the second half of 2014 for 25 years, with Tokyo Gas Co. Ltd. (9531.TO) agreeing to purchase 1.1 mtpa over the same period.

The supply agreements are around 8% less gas than those disclosed nearly four years ago, when Osaka Gas and Tokyo Gas provisionally committed to purchase 1.5 mtpa and 1.2 mtpa of LNG from the project for 25 years.

Chevron has also agreed to supply its 50% owned energy company GS Caltex Corp. of South Korea with 0.5 mtpa of LNG for up to 20 years from Gorgon and other Chevron gas projects. The Korean firm is owned in a 50% joint venture with GS Holdings Corp. (078930.SE)

The Gorgon field has potential reserves of more than 40 trillion cubic feet of gas and an estimated economic life of at least 40 years from startup. With production due to commence in 2014 after five years construction, Gorgon is Australia's largest single resource project and the sales agreements build on earlier deals with energy-hungry Asian importers.

Another Gorgon partner, ExxonMobil Corp. last month struck two deals over Gorgon LNG, including a 20-year deal with PetroChina Co., the listed unit of China National Petroleum Corp., to buy 2.25 million metric tons of LNG a year, and a 20-year agreement with Petronet LNG Ltd., India's largest LNG importer, for 1.5 million tons.

The Australian government, which last month granted conditional environmental approval to expand the proposed project to a third LNG train or processing facility, welcomed the news of further customers.

"These contracts will deliver A$70 billion worth of exports for Australia over the next 25 years," Prime Minister Kevin Rudd told lawmakers in Canberra.

"It's been a great month for the Australian LNG export industry," he said.

Subject to Australian foreign investment approval, Osaka Gas will acquire a 1.25% interest in Gorgon and Tokyo Gas will acquire a 1% stake in the project from Chevron.

Further sales agreements for Gorgon gas are expected in "coming months," with a final investment decision on the project expected in "coming weeks," said Chevron.

Japan's Chubu Electric Co. Inc. also signed a heads of agreement in November 2005, provisionally committing to purchase 1.5 mtpa of LNG from the project.

A spokesman for Chevron declined to comment Thursday on the status of any other ongoing commercial negotiations.

The project off Australia's northwest coast is operated by Chevron in joint venture with ExxonMobil and Royal Dutch Shell PLC, which each have a 25% stake.

The construction project, which Chevron expects to create around 10,000 indirect and direct jobs, includes three 5.0 mtpa LNG trains, a large plant to strip, inject and sequester the high levels of carbon dioxide in Gorgon's natural gas deep underground and a plant to process gas for domestic consumption.

-By Bill Lindsay, Dow Jones Newswires; 61-2-8272-4694; bill.lindsay@dowjones.com

(David Winning in Sydney contributed to this article)