CHEVRON has taken another stride in the race to develop Western Australia's vast gas resources, signing a record-breaking $90 billion supply deal with a Japanese customer.
CHEVRON has taken another stride in the race to develop Western Australia's vast gas resources, signing a record-breaking $90 billion supply deal with a Japanese customer. At the weekend the US oil giant signed the heads of agreement with the Tokyo Electric Power Company, which will buy 4.1 million tonnes of gas a year over two decades from the planned Wheatstone project.
WA Premier Colin Barnett said the deal was worth $90 billion, trumping the $50 billion gas sale to China from the Gorgon project as Australia's biggest sales contract.
The Japanese power company, seen as a top-notch customer, will also take a 15 per cent stake in the gas field and an 11.25 per cent stake in the processing facilities.
Chevron will not make a final investment decision on Wheatstone until 2011, but the deal demonstrates the strength of Asian gas demand and gives Chevron a jump over its rivals in the region.
It also adds to the fierce rivalry between Woodside and Chevron, which have clashed repeatedly in recent months in the scramble to develop the massive liquefied natural gas (LNG) projects.
Last month Chevron outbid Woodside in a contest for gas resources owned by Apache Energy and Kuwait Foreign Petroleum Exploration Company (KUFPEC), in a deal Woodside chief Don Voelte said was ''stupid''.
Woodside had been hoping to secure the gas for its rival Pluto 2 project, but instead Apache and KUFPEC further strengthened Wheatstone by acquiring stakes in the project of 16.25 per cent and 8.75 per cent, respectively.
Further inflaming tensions, the Federal Government last week ordered Woodside and its partners in the nearby Browse project, including Chevron, to approve the development or risk losing the leases.
Woodside then threw down the gauntlet to its partners, saying it could buy them out of the project if they did not declare an intention to proceed within 30 days.
Wheatstone looks increasingly likely to go ahead after the $90 billion agreement at the weekend, but it also shows that Asian customers could be willing to buy stakes in projects such as Browse.
Chevron plans to process gas from Wheatstone at Ashburton North, in the state's north-west. The plan will require environmental approval from the Government.
''The State Government and proponents, including Chevron, are working to obtain planning, heritage and environmental approvals for the Ashburton North estate,'' Mr Barnett said.
With several multibillion-dollar LNG projects on the drawing boards in WA and Queensland, the industry is set for huge expansion next decade. The Reserve Bank has forecast that LNG exports could increase fourfold by 2020, joining coal and iron ore as the country's biggest exports.