REUTERS

PERTH

CHEVRON has signed a preliminary agreement to supply Japan’s Chubu Electric Power Company with liquefied natural gas from its Wheatstone plant in Australia, the US oil major said on Tuesday.

Under the non-binding agreement, Chubu Electric will buy 1 million tonnes per year (mtpa) of liquefied natural gas (LNG) for up to 20 years.

The agreement adds to supplies that Chubu, Japan’s third largest utility, has already agreed to buy from another Chevron-operated Australian LNG project, Gorgon LNG.

“Chubu is a long term customer of our Australian natural gas portfolio and is due to receive 2.5 mtpa of LNG collectively from the Gorgon and Wheatstone projects,” Roy Krzywosinski, managing director, Chevron Australia, said in a statement.

Wheatstone, located off the coast of Western Australia, is currently under construction, with the first gas shipments expected in 2016. Chevron did not specify when the supplies to Chubu would begin.

With the Chubu agreement, Chevron will have sold 70 percent of the 8.9 mtpa that will be produced by the $29 billion project into longterm contracts, the company said.

Chevron plans to eventually expand the production of the Wheatstone LNG plant to 25 mtpa.

Chevron is positioning itself to become one of the largest LNG producers in Australia. The $37 billion Gorgon project, also off Western Australia, will produce 15 mtpa by 2014.

Australia is expected to surpass Qatar as the top LNG exporter by the end of the decade, when it would have quadrupled its current production of about 20 mtpa.

The LNG deal comes as Japan’s dependence on gasfired power increases as it struggles to replace the nuclear capacity that has been taken offline since last year’s earthquake and tsunami triggered the Fukushima nuclear crisis.

Chubu has a single nuclear plant in the quake-prone Hamaoka area which was shut in May of last year.

Chubu is one of several Asian utilities to buy supplies from Wheatstone, including Tokyo Electric Power Company, Kyushu Electric, and Korea Gas Corporation.