The Australian unit of Chevron Corporation (CVX) entered into a Sales and Purchase Agreement (SPA) with Japan’s JX Nippon Oil and Energy Corporation. Per the terms of the deal, the former will supply about 0.3 million tons per annum (MTPA) of liquefied natural gas (LNG) from its Gorgon Project to JX Nippon over a period of 15 years.
The $37 billion Gorgon project is a natural gas venture in Western Australia, involving the development of the Greater Gorgon gas fields, subsea gas-gathering infrastructure and an LNG plant on Barrow Island. The facility is expected to produce approximately 15 million tons of LNG per year, with the first gas production targeted in 2014.
Apart from Chevron, which holds 47% interest and acts as operator, the Australian subsidiaries of Royal Dutch Shell plc (RDS.A) and Exxon Mobil Corp. (XOM) –– each having 25% stake –– also form a part of the project. The remaining 3% is controlled by Osaka Gas, Tokyo Gas and Chubu Electric Power.
Chevron shares a strong business tie with JX Nippon and expects this collaboration to be successful in fulfilling the rising demand for LNG in the Asia-Pacific arena. Coupled with the other prominent Wheatstone Project, the Gorgon plant will hold the leadership position among natural gas and LNG suppliers in the belt.
San Ramon, California-based Chevron is engaged in oil and gas exploration and production, refining and marketing of petroleum products, as well as manufacturing of chemicals and other energy-related businesses.
We believe that Chevron exhibits an impressive business model with an array of oil and gas development projects, a healthy financial profile and revised asset portfolio. Hence, we maintain our long-term Outperform Rating on the stock. Chevron currently holds a Zacks #2 Rank (short-term Buy rating).
CHEVRON CORP (CVX): Free Stock Analysis Report
ROYAL DTCH SH-A (RDS.A): Free Stock Analysis Report
EXXON MOBIL CRP (XOM): Free Stock Analysis Report
Zacks Investment Research
