Chevron to Obtain Greater Share in Western Australian Wheatstone LNG Project

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Researched by Industrial Info Resources Australia (Perth, Australia)--Chevron Corporation (NYSE:CVX) (San Ramon, California) will retain a greater share of the estimated $30.7 billion Wheatstone liquefied natural gas (LNG) project, cutting back the ownership of joint venture partners Apache Corporation (NYSE:APA) (Houston, Texas) and Kuwait Foreign Petroleum Exploration Company (KUFPEC) (Kuwait City, Kuwait) by 5%.

The Wheatstone LNG production plant project is Chevron's 'next big thing' in Australia, after the Gorgon project. The Wheatstone project has recently moved into the detailed design phase, as the Wheatstone joint venture partners plan to make a final investment decision (FID) in the second half of the year, with construction to kick off near the end of the year. Chevron had originally planned on holding a 75% share in the project, allowing 25% to be shared by Apache and KUFPEC. The Australia-based Apache Corporation subsidiary, Apache Energy, and Kuwait Petroleum Corporation (KPC) (Safat, Kuwait) subsidiary KUFPEC finalised the joint operating agreement with Chevron at the beginning of the year.

Recently, Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, Netherlands) announced that it will purchase a 6.4% stake in the project. Apache will hold a 13% interest in the project, and KUFPEC's share will be 7%. Apache and KUFPEC's combined share will amount to a $6.15 billion contribution, which will be the highest capital investment to date in Australia for both companies. Apache and KUFPEC are joint owners of the Julimar-Brunello natural gas fields, which will supply what was hoped to be 2.1 trillion cubic feet of natural gas to the Wheatstone LNG production plant. It is understood that one of the reasons for Chevron's decreasing Apache-KUFPEC's share is that the 2009 appraisal of the Julimar-Brunello fields is smaller than initially estimated. However, Apache-KUFPEC insists that the size of its Julimar-Brunello gas fields is still as previously stated.

Chevron has stated that the project's overall natural gas resources, including Chevron's Wheatstone and Iago fields, have revealed an increased estimate for gas reserves, following subsurface appraisal work. For this reason, Chevron has announced the decision to ramp up initial production for Phase I (two trains) from 8.6 million metric tonnes per year to 8.9 million metric tonnes per year. Gas supply agreements are already in place, and initial agreements have been signed with Tokyo Electric Power Company (TEPCO) (TYO:9501) (Tokyo, Japan), and Kyushu Electric Power Company (TYO:9508) (Fukuoka, Japan) and Korea Gas Corporation (KOGAS) (SEO:036460) (Seongnam, South Korea) .

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