Shell to join Chevron’s Australia Wheatstone LNG project

PERTH, April 10 (Reuters) – Chevron Corp said on
Sunday Royal Dutch Shell (RDSa.L: Quote, Profile, Research) will join its Wheatstone
liquefied natural gas project off the coast of Western Australia
as an equity participant and natural gas supplier to the
project.

Chevron will sell 6.4 percent of its stake to Shell, and
remain the operator of the project with 73.6 percent stake.
Shell will also assume an 8 percent participating interest in
the Wheatstone and Iago natural gas fields, which will supply
the first two trains of the Wheatstone project.

The agreement comes as Chevron prepares to make a final
investment in the project.

“A final investment decision is expected in the second half
of this year once environmental approvals and other associated
agreements are finalized with various levels of government,”
Chevron Australia managing director, Roy Krzywosinski said in a
statement. He also said front-end engineering and design (FEED)
activity on Wheatstone is nearly complete.

The first phase of the Wheatstone project will have a
combined capacity of 8.9 million tonnes per annum (mtpa) of LNG
as well as a domestic gas plant.

Chevron is positioning itself to become one of the largest
LNG producers in Australia, with the construction of the A$43
billion Gorgon project, also off the coast of Western Australia,
which is set to produce 15 mtpa by 2014.

Shell is also developing several LNG projects in Australia,
and is set to make a final investment decision on its 3.5 mtpa
Prelude floating LNG project this year. Shell has also proposed
a coal seam gas to LNG project in Australia’s eastern Queensland
state.

Apache Corporation and Kuwait Foreign Petroleum Exploration
Company (KUFPEC) have also signed deals to become equity
participants in Wheatstone and hold 13 percent and 7 percent
equity, respectively.

Tokyo Electric Power Company (TEPCO) and Kyushu
Electric Power Company also intend to become equity
participants in the project, according to Chevron.

Both companies have already signed heads of agreement to buy
Wheatstone LNG. Korea Gas Corporation (KOGAS) has
also signed a heads of agreement to purchase LNG from the
project.

(Reporting by Rebekah Kebede, editing by Miral Fahmy)

Shell to join Chevron’s Australia Wheatstone LNG project