U.S.energy firm Apache Corp. (APA) entered into a deal to sell liquefied natural gas (“LNG”) from the Wheatstone venture in Australia. The company said that its Australian subsidiary has signed a long-term agreement in this regard with Japanese utility behemoth Tokyo Electric Power Co. (also known as TEPCO) and Chevron Corp. (CVX), the operator of the project.
The Wheatstone gas fields, off the coast of Western Australia, are estimated to contain 4.5 trillion cubic feet of gas deposits. Chevron has said that the venture will have an initial annual capacity to produce 8.6 million tons of LNG, with the first shipment expected in 2016. A final decision on the project is expected in the second half of 2011. Chevron holds a 75% operated interest in the $20 billion project, with the other partners being Apache and Kuwait Foreign Petroleum Exploration Co. (“KUFPEC”).
Apache Julimar Pty Ltd (a unit of Apache); KUFPEC Australia (Julimar) Pty Ltd, (a unit of KUFPEC), and Chevron Australia Pty Ltd, have signed a contract with TEPCO to market LNG produced from their respective fields on a combined basis to the latter. In this context, during December last year, Chevron entered into a contract to sell 3.1 million tons of LNG to TEPCO for a period of up to 20 years. Approximately 75% of the purchases under the pact are expected to be through Chevron, while the remaining 25% will come from Apache and KUFPEC.
Apache’s agreement with TEPCO, whose financial terms were not disclosed, will not only provide a road map for integrating Apache and KUFPEC into Chevron’s and TEPCO’s previously signed contract but also mark the beginning of a long relationship between Apache and TEPCO.
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