Chevron Lands Gorgon LNG Export Deal Worth $60B with Japan, South Korea

Last Updated Sep 10, 2009 2:43 AM EDT

Chevron has signed agreements with Japan and South Korea for $60 billion worth of liquefied natural gas from its massive Gorgon project just weeks from making its final investment decision.

The San Ramon, Calif.-based company will supply nearly 3 million tons per annum of LNG to Osaka Gas, Toyko Gas and GS Caltex. Chevron owns a 50 percent stake in GS Caltex. Osaka Gas and Tokyo Gas will buy stakes in the Gorgon project in Western Australia as part of the supply agreement.

Chevron did not reveal the financial details of the agreements. However, Australian Prime Minister Kevin Rudd said the deals would be worth more than A$70 billion -- or $60 billion -- of exports over 25 years, Reuters reported.

The Chevron-operated Gorgon is expected to have a capacity of 15 million tons per annum and a carbon dioxide injection project. The Australian government has given an environmental approval of the $42 billion project and issued production licenses for upstream gas fields.

The agreements announced late Wednesday follow recent LNG sales from Gorgon's other partner ExxonMobil which owns 25 percent of the project. Last month, Exxon signed an agreement to supply PetroChina with 2.25 million tons per annum of LNG and another deal with India's Petronet1.5 mtpa.

Royal Dutch Shell, which owns the remaining 25 percent, signed an agreement to supply PetroChina with LNG from the Gorgon project in 2007.

Specifics of the Chevron agreements:
  • Chevron will supply Osaka Gas with 1.375 mtpa of LNG over 25 years
  • Osaka Gas will buy 1.25 percent equity in the Gorgon porject
  • Chevron will supply Tokyo Gas will 1.1 mtpa of LNG over 25 years
  • Tokyo Gas will buy a 1 percent stake in the project
  • Supply from both agreements is expected to begin in the second half of 2014
  • A separate agreement also has been signed with GS Caltrex for 0.5 mpta for up to 20 years. LNG to GS Caltrex will come from Gorgon and other gas within Chevron's portfolio.
  • Kirsten Korosec

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